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Home My WebLink AboutAgenda Packet 04/30/2001UTILITY ADVISORY COMMITTEE - SPECIAL MEETING APRIL 30, 2001 PRINT NAME ORGANIZATION Utility Advisory Committee - Special Meeting Public Works Conference room Port Angeles, WA 98362 April 30, 2001 3:00 p.m. AGENDA I. Call to Order II. Roll Call II1. Minutes of the April 9, 2001 meeting will be approved at the regularly scheduled meeting May 7th IV. Discussion item Fiber Optic Backbone Business Plan V. Next meeting - May 7, 2001 Vi. Adjournment pORTA_NGELES WASHINGTON, U.S.A. UTILITY ADVISORY COMMITTEE MEMO DATE: April 20, 2001 TO: UTILITY ADVISORY COMMITTEE P.A. WORKS COMMITTEE FROM: LaiTy Dunbar, Power Resources Manager SUBJECT: Fiber Optic Backbone Business Plan Summary: Mr. Richard Li and Dr. Paul Carlson of Metropolitan Communications Consultants will present the draft business plan at a special meeting of the Utility Advisory Committee and P.A. Works! Committee on April 30, 2001 at 3PM. The meeting will be held in the Council Chambers. Recommendation: The report will be presented with no action requested. Background/Analysis: On October 17, 2000, the City Council approved a professional services agreement with Metropolitan Communications Consultants (MCC) for completion of a telecommunications future needs and interests assessment and a business plan for the fiber optic backbone. On February 6, 2001, Council approved an agreement with MCC for Fiber Optic Backbone Engineering Services and withheld notice to proceed until business planning verifies overall feasibility. The business plan is comprised of two documents; a Business Planning Analyses and separate Appendices. The business plan includes a proposed mission "To ensure delivery of broadband telecommunications products and services to Port Angeles by 2002, by enabling the development of the necessary telecommunications infrastructure. "Goals in support of the mission have also been proposed. The draft business plan evaluates the overall feasibility of the fiber optic backbone as well as public/private partnership opportunities. A total of four infrastructure development alternatives were evaluated including: City developed and owned, City/Cable provider partnership, City/Telephone provider partnership, and City/Cable/Telephone consortium. The consultant found that all four-development alternatives were financially feasible. Based on the analyses, findings, and recommendations, a key consideration is the proposed strategic direction and implementation work plan. Staffwill return to the Utility Advisory Committee and P.A. Works! Committee in May seeking a recommendation to City Council to approve the business plan, strategic direction, implementation work plan, including any additional resources that may be required. Attachment: Business Planning Analyses Appendices The Port Angeles Telecommunications Network Business Planning Analyses April 20, 2001 Prepared for City of Port Angeles P.O. Box 1150 321 East Fifth Street Port Angeles, WA 98362-0217 _'~ METROPOLITAN COMMUNICATIONS CONSULTANTS Seattle: 5847 McKinley PI. N., Seattle. Washington 98103 Tel: 206.522.6778 Fax: 206.522.6777 Tacoma: 1201 Pacific Avenue, Suite 1702, Tacoma, Washington 99402 Tet: 253.272.1636 Fax: 253.272.1482 www.mcco.com THE CITY OF PORT ANGELES 321 East Fifth S~reet, Port Angeles, WA 98362-0217 CITY COUNCIL Larry Doyle, Mayor Cathleen McKeown, Deputy Mayor Orville Campbell Lauren Erickson Jim Hulett Glenn Wiggins Larry Williams Michael Quinn, City Manager PROJECT TEAM Glen Cutler, Director, Public Works and Utilities Scott McLain, Deputy Director of Power Systems Timothy Smith, Economic Development Director Tanya O'Neill, Information Technology Manager Project Manager Larry Dunbar, Power Resources Manager Project Consultant Metropolitan Communications Consultants, LLC Seattle and Tacoma, Washington PA TELECOM THE PORT ANGELES TELECOMMUNICATIONS NETWORK BUSINESS PLANNING ANALYSES April 20, 2001 Table of Contents Executive Summary ................................................................................................................... s-1 A. Introduction Background ............................................................................................................................ 1 Authorization ........................................................................................................................ 1 Related Activity ..................................................................................................................... 2 Mission and Goals ................................................................................................................ 4 Competitive Environment ................................................................................................. 4 B. Project Definition Telecommunications Products and Services Value Chain .............................................. 6 Surveys and Interviews ........................................................................................................ 8 Infrastructure Development Alternatives ..................................................................... 10 Business Proposition ........................................................................................................... 12 Value Proposition ............................................................................................................... 12 C. Project Analyses Criteria and Assumptions .................................................................................................. 13 Projects Analyzed ............................................................................................................... 13 Infrastructure General Plan ............................................................................................... 13 Users and Growth ............................................................................................................... 14 Project Cost Estimates ........................................................................................................ 21 Revenue Estimates ............................................................................................................ 22 Feasibility Analyses ............................................................................................................ 24 D. Findings and Discussion Analysis Findings ............................................................................................................... 26 Discussion ............................................................................................................................ 27 E. Recommendations Recommendations .............................................................................................................. 31 METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 List of Tables and Figures Tables 1. Service Providers and Users Contacted ...................................................................... 9 2. Basis of User Projections ............................................................................................. 14 3. City Network Projected User Growth ....................................................................... 17 4. City/Cable Network, Projected User Growth ......................................................... 18 5. City/Telco Network, Projected User Growth .......................................................... 19 6. City/Cable/Telephone Network, Projected User Growth .................................... 20 7. Summary of Annual Costs for Alternative Project Scenarios ................................ 21 8. Summary of Annual Revenues for Alternative Project Scenarios ........................ 22 9. Summary of Project Feasibility .................................................................................. 25 10. PA, Telecom Consortium Operations Framework ................................................... 29 Figures 1. Telecommunications Value Chain ....................................... : ..................................... 7 2. Backbone Concept Plan ............................................................................................... 15 3. Ring, Distribution and Fiber Connection Schematic ............................................... 16 4. Recommended Strategic Direction ............................................................................ 29 METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 Executive Summary p ge s-1 SUMMARY OF FINDINGS City Mission, Goals and Commitment to Enable Broadband Telecommunications · Facing a decline in core natural resource industries such as fishing and logging, the City of Port Angeles has recognized that broadband telecommunications can play a role in stimulating and sustaining community and economic development. · The City of Port Angeles has established an economic development goal that includes evaluation of the cost, benefits, and feasibility of enabling broadband telecommunications in the city. · The City of Port Angeles has therefore undertaken a vigorous telecommunications initiative, the proposed mission of which is: To ensure delivery of broadband telecommum'calions products and services lo Port. Angeles in 2002, by enabh~g the development of the necessary telecommunications infrastructure. · The City's commitment to enable broadband telecommunications is tied to a Community Telecommunications Action Plan and schedule approved by Council on October 17, 2000. Existing Hindrances to Broadband Telecommunications in Port Angeles · The capital expenditures necessary to develop telecommunications infrastructure are the greatest limiting factor hindering providers from deploying broadband telecommunications in Port Angeles. · The cost of last-mile connections to each individual home and business is the largest expense in the deployment of broadband telecommunications infrastructure. Development Options for Enabling Broadband Telecommunications · Four infrastructure development scenarios, the original Power Engineers City Backbone project and three additional consortium scenarios, have been investigated for consideration by the City: Original City Backbone Project - Scenario 1: City developed and owned project Additional Consortium Projects - Scenario 2: City/Cable provider partnership - Scenario 3: City/Telephone provider partnership - Scenario 4: City/Cable/Telephone consortium · Since the primary measure of economic development success is the number of ultimate end-users that can be most quickly benefited, partnering with owners of existing infrastructure to reach the greatest number of Port Angeles residents and businesses is the best means of achieving economic development success. Financial Analyses and Findings · The financial analyses of the options show that aU four scenarios are feasible. · All three consortium projects (Scenarios 2-4) however, are superior to the original City stand-alone project (Scenario 1) in meeting the City's economic development goals, as well as providing cost savings, greater returns and mitigation of risk. Conclusions The findings indicate that any of the consortium projects will meet the City's goals, be superior and easier to implement than a standalone City developed and owned infrastructure project. The findings also indicate the City has a good existing opportunity to develop broadband infrastructure through the current cable franchising renewal. At the minimum, the opportunity can yield a limited non- commercial institutional network. A City developed network, although feasible, is therefore the last choice that the City should consider. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 Executive Summary page s-2 SUMMARY OF RECOMMENDATIONS Policy and Strategic Direction · The City should proceed with a telecommunications network consortium project. · The City of Port Angeles should take a strong, pro-active leadership role in developing and managing the consortium. · The infrastructure project should plan to connect the majority of end users through private partner last-mile infrastructure but concurrently offer the option of direct fiber drops to larger customers needing more bandwidth and w~lling to pay for the required fiber drop. · The City should stimulate the demand for direct fiber drops by providing incentives such as a Iow cost financing program to cover the incremental difference between the copper and fiber drops. This should rapidly increase the number of high bandwidth end-users. · The City should focus on attracting Qwest, Olypen, other owners of infrastructure, and telecommunication service providers to a City led infrastructure development consortium. · In dealing with prospective partuers, the City should provide incentives and determine how it might build their markets to make their participation in a consortium more attractive and justifiable. · The City should undertake development of a project on its own project only as a last choice, in the event no others will step forward or join it in the project development. · At a minimum, should difficulties arise with development of the broadband infrastructure, the City should strive to obtain an institutional network for non-commercial public use. Broadband Infrastructure through Cable Television Franchise Renewal · The City should capitalize on the opportunity provided by the current cable franchise renewal proceedings and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Consortium Implementation · The City should keep developing all available options by concurrently proceeding with work on Scenarios 3 and 4. · The concurrent negotiations will maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · The City should formalize the process of building the consortium to maintain implementation time frame goals. · The City should prepare and distribute a Request for Consortium Partner Proposals to private telecommunications companies. The solicitation process should run in parallel and in close coordination with the Cable Franchise renewal process currently underway. · The City should delay the engineering design phase of the City Backbone project awarded to MCC until the consortium is finalized. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 A. Introduction vag ; BACKGROUND Shifts in the U.S. and global economies have historically changed areas of the country that receive the benefits of economic growth. Municipalltles need to respond to these shifts to remain competitive in the pursuit of economic health and development. As shown in areas that have been left behind, inaction can be a harmful response when faced with changing economic conditions. The latest economic shift has revolved extensively around technological advancements in computing and telecommunications. The convergence of these industries has led to the rise of the Internet and changed the way we live and work. It is a feature of these technologies that people and businesses can now more effectively communicate over longer physical distances. This levels the playing field and creates a solid opportunity for smaller municipalities to compete for economic development opportunities previously beyond their reach. A good example is the trend of larger firms to locate call centers and hundreds of jobs in rural communities with desirable quality of life advantages. Attractive smaller cities such as Port Angeles now can compete but must prepare if they wish to benefit from this new opportunity. Enabling broadband telecommunications in the community is a crucial preparatory step. Conversely, there is a barrier to this opportunity becoming a reality. Infrastructure required for broadband telecommunications is capital intensive, and smaller markets do not provide the return on investment required by private companies. Municipal governments, however, can play a unique role in enabling the market by providing leadership, regulatory oversight and capital for telecommunications infrastructure development. By taking a pro-active leadership position, municipal governments can overcome the limiting factor of infrastructure, and greatly accelerate the development of broadband telecommunications in their communities. AUTHORIZATION The City of Port Angeles recognizes the telecommunications opportunity and the role it can play in sustaining community and economic development. Facing a decline in core natural resource industries such as fishing and logging, the City of Port Angeles has set goals and objectives~ and undertaken a vigorous telecommunications initiative. The various components of this initiative include City sponsored technical studies2, community-wide education and discnssions~, and participation in service provider programs4~ to develop a vision for integrating the community through technology. Summary findings from these programs are given in the section entitled "Related Activity" on the next page, and findings have been incorporated into this report where applicable. On August 10, 2000 the City engaged Metropolitan Communications Consultants (MCC) of Tacoma and Seattle, Washington to prepare a plan of action6 to guide the City in its telecommunications planning and development efforts. The report summarized the City's work to date, identified additional planning needs and telecommunications opportunities and recommended specific action for the City to take over the next three-year period. 1City Council Goals and Objectives 2001 Community Development Objectives: "Review and evaluate the feasibility and cost/benefits of tiber optic expansion, or other teclmological source, to provide broadband services, other advanced technology services, and advanced communication and information services to the community." Economic Development Objectives: "Explore opportunities to support and promote the economic diversification of the community, especially in areas o£ advanced technology, marine industrial, telecommunications, and other potential businesses that can expand our local economy." 2Power E~gineers, Inc., "Communications Systems Evaluation for Public Utility District No. 1 of Clallarn County and the City of Port Angeles", February 10 2000. aDenRee Productions, "E-nable Visions Tour", February 2000. 4Fairpoint Communications, "BridgeWorks~" Program', in pzocess 5Unisys Corp., "E-@action Community Helper Solution", Community Portal Study, November 2000. ~Me~opolitan Communications Consultants, "Community Telecommunications Action Plan", September 29 2000. METROPOLITAN COMMUNICATIONS CONSUL[ANTS 411812001 A. Introduction page 2 On October 17, 2000, the City authorized MCC to implement the recommendations of the September 2000 Action Plan. The authorization covers three tasks, the third of which is this report, as described below: · Telecommunications Ordinance. Assist the City in finalizing its draft telecommunications ordinance and modification of related ordinances for consistency. This task brings the City into compliance with the 1996 Telecommunications Act, provides for management of public rights-of-way and levels the playing field for prospective service providers. The final draft was delivered on March 27, and adoption is anticipated in May 2001. · Community Telecommunications Needs and Interests. This task is to assist the City in its formal proceedings for renewal of the current cable television franchise held by Northland Cable. A procedural requirement of the renewal is an ascertainment of cable related community needs and interests. Making best use of the opportunity, the City has expanded this task to include community telecommunications needs and interests. The work is currently in the public proceedings and data gathering stage and the needs and interest assessment is scheduled for completion in May. > PA Telecom Network Business Planning Analyses (authorizafion for this report). This report was authorized to analyze the infrastructure development options available to the City, and to make recommendations on the best course of action. Because of the commitment to its telecommunications goals and the current industry shortage of optical fiber7, the City implemented a fast track schedule for proceeding with the backbone infrastructure proposed in the Power Engineering8 report. A design contract was awarded to MCC on February 13, 2001, conditioned however, on notice to proceed being withheld until verification of overall feasibility by the business planning analyses. Action on this item is discussed in the recommendations of this report. RELATED ACTIVITY The recognition of the importance of broadband telecommunications has led to various efforts and studies of the current telecommunications environment in Port Angeles. The following activities have been reviewed and their findings are summarized below: Power Engineers, Inc~ On March 22, 2000 the City of Port Angeles and Clallam County Public Utility District No. 1 received an engineering report from Power Engineers, Inc. for a fiber optic backbone communications system in Clallam County. Local businesses were surveyed with 56% stating they would definitely use the proposed system and an additional 20% stating they would possibly use the proposed system. This more detailed business planning study carries forward one of the recommendations of the Power study. E-nable Visions TourTM In February 2001 the results of a survey entitled "E-nable Visions Tour" sponsored by the City and conducted by a local Port Angeles consultant were released. In contrast with the Unisys study described later, survey methods, data, and finding were released in the E-nable report. The survey contacted 2,600 area residents and queried them on subjects such as computer ownership, Internet usage, and interest in telecommunications services. The study found high levels of Internet usage across demographic groups in the community. In addition, 77% of the survey respondents indicated interest in improved bandwidth and advanced telecommunications services. These findings led to the first recommendation of the E-nable report: "Z/w City of Port Angeles should promote and pursue the immediate and rapid deploymen! of widespread, affordable, and proven broadband lechno/ogy such as DSL or cable modems in order to promote economic growth... , ~http:/ /www.zdnet.com/intweek/stories/news/O,4164,2646159,00.html footnote 2 9Ibid ~°See footnote 3. METROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2001 A. Introduction page 3 FairPoint Communications Brid§eWork~,- Program,, In July 2000, FairPoint Communications, a competitive local exchange carrier (CLEC), gave a presentation of their BridgeWorks,,. program to a group of interested parties, including members of PA WORKS! The program's goal is to assist communities in using advanced telecommunications services to stimulate economic growth. The program has four phases, starting with a needs assessment and proceeding through collaboration, implementation to the final stage of economic acceleration. Fairpoint with the support of PA WORKS! has been coniSnuing this program with periodic workshops for key community, business and governmental leaders. Unisys Corporation= In May 2000, the Unisys Corporation announced that it had selected Port Angeles as the site for a feasibility study for a community portal to access the Internet. The project however, was dropped in November after Unisys announced the decision related to their study. The company cited a dispersed population base, lack of infrastructure, and low levels of Internet use as the obstacles to the project. It is important to note, however, that details on the study methods, data, and findings have not been released. Sappho Gap Project~ The Cities of Port Angeles and Forks have worked together since April of 2000 attempting to create a fiber loop through all of Clallam County. The Sappho Gap is the name assigned to a missing section of irffrastructure which would connect existing systems being installed by CenturyTel on the west side of the Olympic Peninsula, with the Qwest infrastructure on the east side. The project entails linking the CenturyTel and Qwest systems at a meet point between Joyce and Sappho. In September 2000, the Clallam County Economic Development Council submitted an application to the Washington State Community Economic Revitalization Board (CERB) for Qwest Settlement Telecommunications Project Assistance grant funds for the Sappho Gap project. Review of CERB proposals takes place once a quarter and the next scheduled date is in April 2001. Preliminary results are that the project is on CERB short list. Wireless Communication Planning in Clallam County,4 In April 2001, the Clallam County Economic Development Council and Clallam County PUD No. 1, authorized a study entitled "Wireless Communication Planning in Clallam County", a project to evaluate and design an optimum wireless voice and high-speed data communications infrastructure plan for Clallam County. The study entails identification of existing service and of technology limits for various wireless providers and design of a plan for an "open access" platform for wireless communications facilities. NoaNet~5 The Northwest Open Access Network (NoaNet) is a nonprofit corporation that has licensed fiber optic cables from the Bonneville Power Administration to build and operate a broadband network that serves public power electric utilities and their customers in the state of Washington and parts of Oregon. NoaNet is envisioned to be a broadband communications backbone between public utility districts (PUD's) and other entities, allowing access to network services by the PUD's and their customers as well as establishing a common broadband link to the Internet for use within their respective Districts. NoaNet's initial Washington network was put into operation in January 2001. Service providers are now being solicited. ~See [ootnote 4. 12~e footnote 5. l~See footnote 5. 14Clallalll Coul~ty Economic Development Council and Clallam County PUD No. 1. "Wi~eless Communication Planning in Clailam County", study in progress by Hatfield and Dawson, April 12, 2001. ~Shttp: / / w~vw.noanet.net / about.htutl. METROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2001 A. introduction page 4 BPA began installing approximately 107 miles of fiber optic cable between its Olympia substation and its Port Angeles substation in March 2001 and is expected to complete most of its work by July 2001. NoaNet has indicated that its schedule follows closely thereafter, probably in the 2nd or 3rd quarter of 2001. NoaNet's Port Angeles area member is the Clallam County PUD No. 1. NoaNet represents an alternate way (to Qwest) off the peninsula for any Port Angeles telecommunications infrastructure. A map of the NoaNet Olympia to Port Angeles network route map is shown in Appendix 15: MISSION AND GOALS Based on the foregoing economic development background, the proposed mission of the City of Port Angeles Telecommunications Initiative is: To ensure delivery of broadband telecommunications ?roducts and services lo Port Angeles in 2002, b~ enabling the develo?ment of the necessary telecommunicatians infrastructure. Broadband telecommunications services consist of the following: · High-speed transmission of data, voice, and video traffic, including broadband Internet access via DSL modems, cable modems, direct fiber connections, or wireless technologies. · Local area networking (LAN), and wide area networking (WAN) · Digital cable television City Goals The goals of the initiative are in support of the above mission statement. These goals include: · Plan, develop and enable an economically feasible infrastructure project. · Enable the largest number of homes and businesses to obtain broadband telecommunications in as rapid a time frame as feasible. · Foster competition in the delivery of products and services. · Prevent the development of excessive redundant infrastructure. COMPETITIVE ENVIRONMENT Any project that changes the telecommunications landscape will have impacts on the competitive dynamics of the industry. As a result, it is crucial to understand the current competitive situation of telecommunications infrastructure in the area prior to undertaking a project. In this way, the City of Port Angeles can better understand potential parhaers and competitors to any network developed, Off the Peninsula Any telecommunications network within Port Angeles and the surrounding area must connect to a line traveling off the Olympic Peninsula that connects on the other end to the major nationwide trunk lines crossing the country. At the current time, the only provider with a high capacity fiber optic line off the peninsula is Qwest, with a line that connects to a trunk line in Seattle. Access to this line can be provided from Qwest's central office in downtown Port Angeles. A competitive line is currently under construction by BPA/Northwest Open Access Network (NoaNet) of which the Clallam County PUD is a member. BPA reports this line will be completed in late summer 2001 with a Point of Presence at the Port Angeles BPA substation. A third project is the previously described Sappho Gap project that provides the currently missing link to connect Port Angeles to Forks and on to major trunk lines near Olympia. All traffic carried by any future Port Angeles backbone will have to utilize one of these methods to carry traffic to and from the community. In addition, users requiring high levels of uninterrupted service may require redundancy beyond the existing Qwest trunk prior to locating their businesses in the area. Port Angeles Backbone A backbone aggregates, carries, and distributes traffic coming into and leaving the city. The backbone connects to the trunk line off the peninsula and contains last-mile distribution cross connections. At the present time an integrated, open-access fiber optic backbone does not exist in Port Angeles. The current infrastructure is a patchwork of copper, coaxial cable, fiber-optic and wireless connections built by METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 A. Introduction page 5 separate users in an attempt to provide bandwidth for their needs. The most substantial backbone section is a high capacity fiber optic ring between the Qwest central office and their largest customer, Olympic Medical Center. Northland Cable has a smaller amount of backbone fiber to carry their cable television traffic. It would be advantageous to design an integrated, open-access backbone that builds upon and connects to current available infrastructure, but execution would depend on partnerships between the builder and current owners of private infrastructure. Last Mile Beyond the new backbone, the last mile connection to the end-user presents the greatest challenge of all the segments of any new telecommunications irtfrastructure. Cosily connections must be provided, one by one, to each home or business. The cost and the delayed time frames associated with providing fiber drops directly to the end-user has become the limiting factor in attempts elsewhere to provide community-wide fiber connections. As a result, the vast majority of other network projects have utilized DSL and cable modem technology to provide broadband data communications. These technologies utiUze copper and coaxial connections already connected into the majority of homes and businesses. In Port Angeles, Qwest is the primary owner of the copper connections to the end-user that have traditionally carried only voice traffic. Northland Cable has coaxial connections providing cable television to approximately 60% of the homes in the City. Connecting a new fiber backbone to either of these last-mile irtfrastructure layouts will dramatically accelerate the adoption of broadband telecommunications to the commurtity~ Fiber oplic connections can still be made available to users willing to pay a higher price for the increased bandwidth the fiber cormeclion will allow. Olypen, a local Internet Service Provider, is currently providing wireless last mile connectivity to homes and businesses on a limited basis. The company has installed various antennas at key high points in the community. Olypen then provides a wireless data connection at broadband speeds up to 1 Mbps. A significant limitation of this service is the requirement for uninterrupted line-of-sight between the antenna and the home or business. METROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2001 B. Project Definition 6 TELECOMMUNICATIONS PRODUCTS AND SERVICES VALUE CHAIN A representation of the telecommunications products and services value chain is presented in Figure 1. This figure provides an overview of the flow of products and services to the end-user and shows representative companies operating in each segment of the chain. An important aspect of the value chain is the distinction between providers of infrastructure, labeled in green, and the providers of products and services, shown in blue. Many private companies operate in only one distinct area of the chain. Others, such as Qwest operate across multiple areas. Products and Services Telecommunications products and services include software, content, and the ability to connect to the Internet using an Internet Service Provider (ISP). Specialized marketing and technology expertise is required to successfully compete in these marketplaces. Numerous private companies provide these products and services over installed telecommunications h-ffrastructure. Infrastructure To reach the end-user, companies offering telecommunications products and services rely on owners of infrastructure to provide a pathway to the customer. These infrastructure companies can be split into two sub-groups: · Infrastructure product companies that manufacture and provide tiber, copper and network equipment. · Organizations that ultimately provide and "light up" the copper or fiber wires that connect homes and businesses. These pathway providers operate in three segments: - Trunk carriers that carry telecommunications traffic between communities, regions, and nations; - Backbone carriers that carry traffic aggregated on a community or metropolitan level and - "Last mile" providers that carry traffic in and out of individual homes and businesses. Municipal governments such as the City of Port Angeles have core competencies in enabling or providing infrastxucture to the community, and have the ability to operate in the select regions of the value chain that exist within their jurisdiction. This opportunity includes the backbone and last mile infrastructure connec~ons to the community. Role of the City The City should be open to any course of action that can meet the above mission and goals. As such it can play any role that will accomplish its goal, from being just a regulator and facilitator to infrastructure developer and builder. There are compelling reasons however, for the City to take an authoritative leadership role. As previously mentioned, the limiting factor in deploying broadband telecommunications is the capital expenditure necessary to build the infrastructure required as a first step. Due to the smaller market size of the Port Angeles area, private companies have been unwilling to spend the capital. On the other hand, private companies are also wary of municipalities building networks for fear of perceived "unfair" competition. The resulting situation is a stalemate with demand unsatisfied and "new age" economic development stalled. The City for the following reasons however, can effectively address both difficulties: · The backbone infrastructure falls within the city limits and the City has the authority to build it. · The City should be willing to bring capital, rights-of-way, poles and other assets to any development proposal. · The City has experience in providing infrastructure to the community and will do so if necessary. · The City however, should be committed to be an infrastructure enabler, not necessarily a builder, and not a service provider competitor. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 B. Project Definition page 7 CoBteBt ApplicetioB Pro,idem (e.g. Starwave, ESPN, Disney) ApplicaUoB Service Pro~ide~s (e.~. ~apster, Ya~o, IBt~m~ ~ce Software Operating S~rstem~ (e.g. Hewlett Packard) Telecommnmi~tions Iletwo~ Eqwipme~t (e. ~. Cisco, Noah, Harconi, ~atel) Tra~smi~ioB H~ia, Fibe~lCoppe~ Pmvide~ (e. g. Corning, Lucent, Fuj~kur~) (e.g. AT&T, Sprint) Figure 1: Telecommunications Value Chain METROPOLITAN COMMUNiCATiONS CONSULTANTS 4118/2001 B. Project Definition page 8 The City should not provide telecom products and service. · The City should support, however, competition in the market and should be willing to be the service provider of last resort in the event competition does not evolve. · The City is in the planning stage and has not made any decisions but should be committed to enabling broadband telecommunications in Port Angeles in 2002. · The City should be open to any and all possible solutions for solving the limiting factor of broadband access. · Concurrent Cable Franchise Renewal and Institutional Network negotiations provide the City with excellent opportunities to form partuerships with private telecommunications providers to begin working toward a solution. Once the capital-intensive backbone infrastructure is in place, telecommunications service providers are typically eager to deliver their products and services over the network. Instead of having to make large capital investments, service providers can instead pay the infrastructure providers as they receive revenues from their customers (the end-users). Thus the limiting factor of the value chain can be overcome. In this typical scenario, the end-user becomes a customer of the product and service provider, and the product and service provider becomes the customer of the infrastructure provider. SURVEYS AND INTERVIEWS As part of the business planning process, the City of Port Angeles and MCC collaborated on a web-based survey, conducted interviews with select organizations within the community and on March 30, 2001 held a Telecommunications Needs and Solutions Workshop. Organizations were segmented into three groups: · End-users of products and services · Providers of products and services · Providers of infrastructure The results of the surveys and interviews were utilized in the analysis of the competitive dynamics of the telecommunications market in Port Angeles, and helped form the basis for assumptions in the business analysis of options available to the City. A copy of the Workshop report is given in Appendix 16. A list of the service providers and major users contacted as part of this analysis is given in Table 1. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 B. Project Definition page 9 CompaB)~ Name Title TelepkoBe e-mall Service Providers Northland Cable Television Pete Grigoriefl Manager 360-452-$466 pete~norlhlandiv.com Northland Communications Corp, Michael W. Roberge Western Division Ops Mgr 206-621-1351 mrobergeC~orthlandco.com Richard J. (Jack) Dyste VP Technical Services 206-621-t 351 jac~nortffiandco.com Qwest Communlcations Jane Nishita Regional Manager 206-345-2316 inishi~qwest.com Fairpoint Communications Daniel P. Fine Regional VP of Sales 704-414-2527 dfine~airpoint.com L~mn Scherencel 360-417-9757 Ischerencel~fairpolnt.com John Ufley jutle~airpoint.com CenturyTel Tim Grigor Wa. General Manager 253-85~-1345 Jill Comsa Account Manager jilLcomsa~centu~tel,com Ross Shenner Area Manager Tony Nicholson Area Manager t on y. nicholson~cent uryt el.corn Avlsta Communications Greg Greene President 509-444-4900 Karen Moses General Manager, Yakima 509-853-4010 kmoses~avistacom.net New Edge Networks Sal Cinquegrani Exec, Dir. Community Relations 360-693-9009 Nu Wave Communications Heldi Dunfield SVP, Business Oevelopment 541-386-5000 Ten Fonvard Communications Sheldon Koehler Owner 360-457-9023 sheldon~tenforward.com Darren Atkins Manager 360-4sT-g023 Olypen Mike Breen Owner 800-962-87 t 4 billing@olypen,com Jared Emory Broadband Design Engineer 800-g62-8714 Ter~7 Kennedy 800-962-8714 te~lypen,com Olympus.net Ned Shenann nedC~olympus.net Dave Meyer dave meyer~olympus.net Angeles Communications, Inc. Bob Jensen 360-457-4375 Excel Utility Construction Dill Roberds 360-452-1110 billwash~lypen.com Clallam Co PUD No, 1 Fred Mitchell A~sistant General Manager 360-452-9771 x235 fredm@dallampud.net Northwest Open Access Ne~ork Dave Spencer Chief Operating Officer 208-343-6477 dspencer~6~oanet.net PA Prospective Large User~ Clallam County Daniel Gouin Central 5er~ces Department 360-417-2000 x2406 dg ouin~co.¢lallam .wa.u s Port of Port Angeles David H. Hagiwara Deputy Executive Oirector 360-417-3422 daveh@portofpa,com Bill James bjames~poto~a.com Port Angeles School District 12t Steve Baxter Supen~sor of IS & Y~chnology 360-457-8575 x33 steve_baxte~asd.wednet.edu Peninsula College Ken Jacobson Director of 15 360-452-9277 kj a co b s o~'~'~'~'~'~'~'~'~lc .e d u Emma Janssen emma~pcadmin.ctc.edu Olympic Medical Center Evan Boyd Sr. Ne~ork Administrator 360-417-7192 e boy~olym plcm edical.or g Craig Haught Eric Jacobson GaP/5mlth grsmith@olympicmedicaLorg Virginia Mason Por~ Angeles Ida Brooks 360-457-2156 First Federal Savings & Loan Paula Johnson 360-457-0461 paula~ffpa.com Daishowa America Kathy Prince IS 5uper~sor 360-457-4474 kat hy,p dn c e([~ aishowaam erica.com Jason Mangano jason, man gan oCc~daish owaamerica.com Table 1: Service Providers and Users Contacted METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 B. Project Definition page 10 INFRASTRUCTURE DEVELOPMENT ALTERNATIVES General The Power Engineers study presented a preliminary engineering evaluation of a City developed and City owned backbone project. The scope of work did not include a thorough consideration of other ownership or governance alternatives or financial feasibility analyses. The report~* did conclude that the City should implement only a transport network and that the City should: ... contract w/Ih olle or more sera/ce prov/ders, such as Ol3,pen or Centu~ Telephone, to provide In considering the relative merits of any alternative the primary criteria is economic development potential. The major index of economic development potential is the number of ultimate end-users that can be immediately benefited. Other related criteria are network geographic coverage and capability. In summary, the best alternative is the network that will serve the most users, have the widest coverage, and offer the quickest and most capable service. In addition to the alternatives that will be discussed, the City is involved in three ongoing telecommunications initiatives. These are: · Cable Franchise renewal proceedings requested by Northland Cable. · Deployment of DSL service by Qwest and resellers. · The Sappho Gap project The City's involvement in these initiatives should continue actively and aggressively, concurrent with evaluation of the broadband network alternatives in this analysis. All avenues should be explored to develop the most favorable business proposition for the City to implement. Status Ouo, Private Network Alternative Under this alternative, the City would not initiate any development, and provision of broadband telecommunications would be left to private companies to develop in accordance with their individual market strategies. Private companies, however, consider port Angeles a smaller market that does not justify the capital expenditures necessary. This has been QwesFs position until February 19, 2001 when Qwest in an unexpected turn-around indicated to the City that it would furnish DSL service in Port Angeles, a move that may in part have been prompted by the City's active consideration of other altematives to jointly provide broadband services. We view this to be a positive development. Under this alternative the City's activities would be limited to: · City accepts status quo, remains a customer of incumbent providers and is dependent on their plans. · City updating of its policies and regulations to comply with the 1996 Telecommunications Act, to level the playing field, and to ensure a competitive market in the area under its jurisdiction. This work has already been implementedv by the City and is scheduled for completion in May 2001. · City makes available and manages its rights-of-way and telecommunications assets to providers on a non-discriminatory basis. In doing so, the City must be prepared for separate and duplicate systems, heavy use, damage, and repeated repair of its streets, poles and other assets. Under this alternative, the City has no leverage to determine the extent or timing of broadband telecommunications and significant, competitive services could be delayed for many years. This alternative will not meet the City's economic development goals and is a default approach, one already considered in related studies and found to be unacceptable. City Network Alternative A second alternative is City development of a broadband transport network. By developing such a network and making it available to all qualified service providers, the City integrates provider needs, Power Engineers, Inc., page 1. ]?City of Port Angeles, "Telecommunications and Related Ordinances" Adoption Draft, March 26, 2001. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 B. Project Definition page 11 eliminates duplicate networks and optimizes management of its limited rights-of-way and other telecommunications assets. This alternative also provides maximum protection for the public interest in contrast to a privately developed network where the owners would be inclined to "cherry pick" the most profitable customers and not provides citywide service. On the other hand, this alternative carries great risk, related to competition, competencies, and financing. If the network is to be wholly owned by the City, the City will also have to construct the distribution and last mile system to reach the ultimate end-users. Also, even though the City may only intend to provide the transport pathway, the project may be perceived as inappropriate use of public monies in competition for the customers of the incumbent private companies. If the City can assure the private providers that they, not their end-users, are the City's target customers, competencies and system standards then become an issue. Required system redundancy, dependability, network management, operation and maintenance will be at levels far beyond existing in-house City competencies. These challenges are not technically insurmountable but may well be financially unachievable. Public/Private Network Alternative The most attractive alternative available to the City of Port Angeles is for the City to take a leadership role in a public/private consortium network alternative. Ideally this consortium would have as members, one or both of the incumbent providers of existing last-mile infrastructure. By developing a backbone that connects to the last-mile infrastructure of these incumbent partuers, the number of ultimate end- users immediately benetited increases dramatically beyond that in other alternatives. There are other advantages for considering such an alternative: · Close coupling of public/private partners allows the best matching of needed competencies with the proper resources and market focus. · The public interest is protected while risk is spread among a larger group of participants. · Financing risk can be balanced using both public and private, available financing opportunities. · Making use of partners' last mile infrastructure through DSL and/or cable modems is a less capital- intensive first step that allows network costs to be managed incrementally and to grow with demand. · Using a private partner's existing last mile infrastructure immediately enables widespread broadband service which may be adequate to meet demand, particularly among residential users for a long time. · At the same trine, fiber drops can be offered concurrently to users needing higher bandwidths and willing to pay the cost of early deployment of new fiber optic last mile infrastructure. · Quick deployment of widespread broadband service will also enable the City to implement broadband utility applications much sooner, an imperative in the current electric utility market. Cable Television Infrastructure Upgrading The City of Port Angeles is currently in the formal franchise renewal process with Northland Cable for the Cable Television Franchise in Port Angeles. These negotiations provide the City with the opportunity to work together with Northland to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Institutional Network At a minimum, should the City not proceed with a City owned network or if no partnerships can be achieved, the City still has the opportunity to obtain a governmental and educational institutional network through the cable franchise renewal. An institutional network will limit broadband service to non-commercial public, educational and governmental users but will allow dramatic cost-savings and efficiencies in their operation. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 8. Project Definition page 12 BUSINESS PROPOSITION Port Angeles Telecom The business proposition is the creation of a new business to provide broadband telecommunications products and services in the city of Port Angeles. The new business, for convenience hereafter referred to as Port Angeles Telecom (PA Telecom), would be developed, owned, and operated either by the City or a City led consortium as previously described. Physical Infrastructure The physical infrastructure itself will be a high speed, high capacity, citywide network, serving the proprietary communications needs of the City of Port Angeles and institutional, commercial and residential customers in the City. The initial phase of the infrastructure would consist of a fiber optic backbone and a hybrid fiber/copper distribution system. Later phases of the iruSastructure development could bring upgrades of the distribution system to the ultimate state of an all-fiber network with fiber to VALUE PROPOSITION The City's Competitive Advantages With the business proposition it is crucial for the City to clearly understand the value proposition it brings to any negotiation or business arrangement to enable broadband telecommunications. The City has a strong value proposition based upon the following competitive advantages: · The City's willingness to bring substantive capital to any project deemed feasible by business analyses. This is a crucial item that private companies have identified as the limiting factor to accelerated private build out of infrastructure. · Access to long term municipal financing, which is more favorable than private commercial financing. · Control of public rights of way, poles, and other telecommunications assets. · Experienced project management and prior experience in providing and managing utility infrastructure in Port Angeles. · Valuable competitive advantage in the City's sohd customer relationships. · The ability to facilitate the navigation of governmental and regulatory issues relating to a project. · Skilled management and leadership ability in consortium building and partnerships. · Wilhngness to sell its share of any developed network once the project is complete and operations are stable. This is consistent with the City goal of en~b/sDoo broadband telecommunications in Port Angeles and not becoming a competitor with private industry. Its strong value proposition should make the City an attractive parlmer in the eyes of private companies in an infrastructure development consortium. The City's Crucial leadership Rolo The above advantages give the City a strong position to negotiate and to take the leadership role in any project for development of telecommunication infrastructure. It is crucial that the City take the lead if it is to achieve its goals, as private companies have understandably different goals based on profitability, not necessarily consistent with the City's economic development and public service goals. The City can further enhance its advantages by leveling the playing field to attract competition, by creating a favorable telecommunications environment, by preparing itself, and by developing community readiness. The City leadership is essential for these inter-related telecommunications and economic development activities to be successfully accomplished. M[TROPOUTAN COMMUNICATIONS CONSULTANTS 4118/2001 C. Project Analyses CRITERIA AND ASSUMPTIONS The criteria and assumptions used in the project analyses are listed below. The criteria are based on project materialS gathered, design and cost data ~rom MCC records and current industry and vendor sources, Conservative planning assumptions have been used, and where appropriate remain consistent across all analyses. The primary criteria and assumptions, based on a ten-year analysis period, are shown below: PROJECTS ANALYZED Project analyses were performed on four potential PA Telecom network projects. The first is an analysis of a City developed project, the other three are City led consortium projects. The four projects are: City Developed · Scenario 1, City Developed and Owned PA Telecom Network (also called City Backbone Project). This is a feasibility analysis of the Power Engineers proposal. The infrastructure layout is modified from the Power preliminary design to reflect changes based on a field inspection of the route and an immediate build-out of the backbone rather than a 4 phase build-out as proposed. City Led Consortium Developed · Scenario 2, Partnership with a Cable Provider, desirably Northland Cable, the incumbent cable TV provider and owner of coaxial last-mile infrastructure. · Scenario 3, Partnership with a Tel¢o Provider, desirably Qwest, the incumbent local exchange carrier and owner of copper last-mile infrastructure. Centnry Telephone is another potential partner, having extensive operations on the Olympic Peninsula and infrastructure near but not in Port Angeles. · Scenario 4, Partnership with both a Cable and Telephony Provider. INFRASTRUCTURE GENERAL PLAN The physical infrastructure itself will be a high speed, high capacity, citywide network, serving the proprietary communications needs of the City and institutional, commercial and residential customers throughout the city. The infrastructure will have a ring topology and will consist of a fiber backbone and hybrid fiber/copper distribution system spreading out to reach all potential users. Backbone Layout · At this point, without specific information regarding the existing last mile infrastructures of the incumbent providers, a backbone layout based on the Power Engineers preliminary design, modified per a field survey by MCC/LMSI, has been prepared and is shown in Figure 2. · The backbone consists of 17 miles of 96-strand fiber in a figure-eight ring configuration, with associated voice, data, and video, transport and customer interface equipment, located in 10 network nodes. · All network nodes are assumed to be located in existing City owned buildings or other properties. · ,4 partnership with the cable and/or telephone provider will determine the customized layout to best incorporate the specific provider's last mile distribution infrastructure. It is expected that such a custom layout should result in a ]ess extensive backbone. · To be conservative and for purposes of analysis, the more extensive backbone in Figure 2 has been assumed to be applicable for all scenarios. · A schematic of the backbone between 2 nodes is shown in Figure 3. Distribution Cabling · A city owned distribution system would ultimately consist of approximately 50 miles of last mile fiber and copper cabling reaching an estimated 3,535 customers in the 10-year analysis period. The analyses assume that approximately 242 will be direct fiber and the balance copper connections. METROPOUTAN COMMUNICATIONS CONSULTANTS 4/1812001 D. Project Analyses page 14 · A single partner distribution system would consist of the last mile partner infrastructure integrated into the backbone through approximately 20 miles of distribution fiber connections and direct fiber drops. For analysis purposes, a single over-designed distribution system has been assumed without regard to type of potential partner. · A multiple partner distribution system would consist of all last mile partner infrastructures integrated into the backbone through approximately 36 miles of fiber connections and direct fiber drops. USERS AND GROWTH Basis of User Projections · User growth projections over the 10-year analysis period were estimated for both a City developed network (Scenario 1) and a Consortium developed network (Scenarios 2-4). · For either City or Consortium development, user projections were made for home and business users by the categories of voice, data or cable television customers. · The projections incorporate the findings of the Enable Visions Tour community survey and reports, dated February 2001, but are deliberately set low to achieve conservative analyses. · In the Port Angeles exchange, Qwest's last mile telephone infrastructure and DMS100 switch~8 in its Laurel Street Central Office, currently serve 15,463 residential and 6,454 business access lines. · Since the Port Angeles exchange extends beyond the city and since exact data from Qwest is proprietary and unavailable, the project market in the city for local telephone service has been conservatively estimated at only 60% of the total access lines served by Qwest's Laurel Street Switch. · At 60%, the 2001 available market for voice and data services is 9,278 residential lines (7,732 residences) and 3,873 business lines (1,107 business establishments). The difference between access lines and establishments is noted because construction costs are based on cabling drops (1 per establishment) whereas revenues are based on access lines. · The cable television market currently served by Northland Cable's~9 last mile infrastructure is 10,653 homes passed. Since the 10,653 homes passed include areas outside the city, the telephone data have been extrapolated to get homes passed in the city. The cable television market in the city is therefore made up of 7,732 homes and 1,107 businesses, a total of 8,839 available connections. · Direct fiber customers are assumed to be equal across all scenarios, approximately 4% of the home/SOHO (small office, home office) connections and 30% of business connections. Table 2 summarizes the market opportunities and basis of user projections for each scenario. Development I Home Usens I Business Users I Total Usera Sceeedo I Voice I Data I I veh. I o.ta I c,t, I v.lce I I Desc~riptioes I""'" I I ce...c, I ""ss I '""" I ce""'" I "'" I ce""'" I 20Q1 Hadcet 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Market penetration et 1~ 1 I, la % of yr 200t madmt 1. City Project 17,0% 40.7% n/a 9.9% 34.8% n/a 14,9% 40.0% ~l/a 2. City/Cable 17,0% 43.4% 71.1% 9,9% 43.4% 54.7% 14.9% 43,4% 69,0% 3. City/Telco 100.0% 86.9% n/a 100.0% 86.9% n/a 100.0% 86,9% n/a 4. City/Both 100.0% 86.9% 71.1% 100.0% 86.9% 54.7% 100.0% 86,9% 69.0% Table 2: Basis of User ProJections ~SQwest Conununications interconnecfion Database, see Appendix 15. 19Data furnished by Mr. Pete Grigorieff, Manager, Northland Cable, 2/8/01. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1 812001 C. Project Analyses page 16 Backbone Node A Fire Station user site at node Backbone Device Typical Devi~e ~ a. Nelghbm'hood Dist. Fibers, lyp, Backbone Node A Coverage Ama NoaNst or O~3er X Neighborhood Oist, Fibers, typ. ~c~o~ Node B Back.ne Node B Coverage Area Figure 3: Ring, Distribution and Fiber Connection Schematic METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 C. Project Analyses page 17 Scenario 1 City Network (City Backbone Project), User Projections · The estimated user growth based on a Scenario 1 City developed network is shown in Table 3 and its accompanying chart. · The plak columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Scenario 1 Home Users BImsiBess Users Total Users City Voice Data Catv VoiceData Catv Yoke Detm Catv lafrastrlCtlre lines COBBECtv COllleCb files coeleds COBBeCtv liees COIBeCtv COiledS 2001 Market 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year 2 150 300 0 1 O0 1 O0 0 250 400 0 Year 3 400 800 0 150 150 0 550 950 0 Year4 650 1,300 0 195 195 0 845 1,495 0 Year 5 850 1,700 0 235 235 0 1,085 1,935 0 Year6 1,050 2,100 0 270 270 0 1,320 2,370 0 Year 7 1,200 2,400 0 300 300 0 1,500 2,700 0 Year8 1,350 2,700 0 325 325 0 1,675 3,025 0 Year 9 1,450 2,900 0 345 345 0 1,795 3,245 0 Year 10 1,525 3,050 0 365 365 0 1,890 3,415 0 Year 11 1,575 3,150 0 385 385 0 1,960 3,535 0 12~000 8,8se m~ 6~000 123456 Projed Year 7 8 9 !011 Table 3: City Network, Projected User Growth · Although the backbone can be built quickly, the 10 year build out of a City distribution Lrffrastructure to reach all end-users limits the rate of user growth. This is a hindrance for providers, such as cable television companies, who want to immediately furnish citywide service. · In the City altemative, it has been assumed that cable television will be furnished by the incumbent provider using its own separate network and that the City network will not have any cable television users. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/181200 C. Project Analyses page 18 · It is possible that another cable television company may be attracted to use the City network and be willing to invest in the required distribution and last mile system. This possibility however, is covered by and is a variation of Scenario 2, the City/Cable Partner consortium scenario. · The network's voice customers will be competitive local exchange carriers (CLEC) to whom citywide coverage by infrastructure will not necessarily be a critical factor. This is because CLEC's primarily target businesses, which will be reached in the early build-out stages of the distribution system. · Qwest has a competitive advantage as the incumbent and it has been assumed that a CLEC using the City network to compete against Qwest will gain only 15% of the total voice market and 40% of the total data market by year 11. The voice market assumptions are deliberately conservative in view of the fact that this scenario has the highest risk for the City, as described on page 11. Scenario 2 City/Cable Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 2 City/Cable developed network is shown in Table 4 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. SceB~to 2 Home Users Business Users Total Users CoBsortimm Voice Dab Catv Voice Data Catv Voice Data Cat~ City/Cable lines connects connecls JiBes connects Connects lib COBBeCtv cOBnlKtv 2001 Market 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year 2 150 2,165 5,026 1 O0 310 554 250 2,475 5,579 Year 3 400 2,273 5,076 150 325 559 550 2,599 5,635 Year4 650 2,387 5,127 195 342 565 845 2,729 5,691 Year 5 850 2,506 5,178 235 359 570 1,085 2,865 5,748 Year 6 1,050 2,632 5,230 270 377 576 1,320 3,008 5,806 Year7 1,200 2,763 5,282 300 396 582 1,500 3,159 5,864 Year8 1,350 2,901 5,335 325 415 588 1,675 3,317 5,923 Year 9 1,450 3,046 5,388 345 436 593 1,795 3,482 5,982 Year 10 1,525 3,i99 5,442 365 458 599 1,890 3,657 6,042 Year 11 1,575 3,359 5,497 385 481 605 1,960 3,839 6,102 6,000 2,000 B,O00 Voice IJies 1,960 4,000 Data Users 3,839 0 t 2 3 4 S 6 CATV Users 6,$02 Project Year 7 8 9 10 11 Table 4: City/Cable Network, Projected User Growth METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1 8/2001 C. Project Analyses page 19 · For Scenario 2, the incumbent's 5,579 cable television customers will be brought on board immediately. · Using only a 1% annual increase, the cable television customers will grow to 6,102 users by year 11, a 69% penetration of the 2001 available market of 8,839 homes and businesses passed in the city. · Qwest will still be the incumbent competitor for voice and data services. The market penetration for voice has therefore been assumed to be the same as [or Scenario 1, approximately 15%. · Because the network will have access to all the cable television customers, and because of the immediate availability of cable modem service, it has been assumed that the data market opportunity would be open to the most aggressive competitor. It has been conservatively assumed however, that the Scenario 2 network will get a little under half, or approximately 44% of the available customers. Scenario 3 City/Cable Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 3 City/Telco developed network is shown in Table 5 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. Sce,ado 3 Home Uses S,,si,,~s Users Total Users Colsoltill Voice Data Cdr VoiceData Catv Voke Data Cmtv CJty/Telco lilses CoIBm~ COBBled'ts IJleS connects cottBed~ limes COIBB~%'tS (OItBeds 2.001 Market 9,Z78 7,732 7,732 3,873 1,107 1,107 13,15! 8,$39 8,839 Year 1 Year2 9,Z78 4,330 0 3,873 620 0 13,151 4,950 0 Year 3 9,324 4,546 0 3,892 651 O 13,217 5,197 0 Year4 9,418 4,774 0 3,931 683 O 13,349 5,457 0 Year5 9,512 5,012 0 3,971 718 O 13,482 5,730 0 Year6 9,607 5,263 0 4,010 754 0 13,617 6,017 0 Year7 9,703 5,526 0 4,050 791 O 13,753 6,317 0 Year8 9,800 5,803 0 4,091 831 O 13,891 6,633 0 Year9 9,898 6,093 0 4, I32 872 0 14,030 6,965 0 Year 10 9,997 6,397 0 4,173 916 O 14,170 7,313 0 Year 11 10,097 6,717 0 4,215 962 0 14,31Z 7,679 0 16~000 [ o,ooo1 4,000 I 2 3 ' 4 ~%lB*41~411'~ql~ CATV IJse~s 0 567 Projed Year 8 0 10 11 Table $: City/Teleo Network, Projected User Growth METROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2OO1 C. Project Analyses page 20 · In Scenario 3, it has been assumed as in Scenario 1 that cable television will be furnished by the incumbent provider using its own separate network and that the network will not have any cable television users~ Scenario 4 City/Cable/Telco Consortium Network, Projected User Growth · The estimated user growth based on a Scenario 4 City/Cable/Telco developed network is shown in Table 6 and its accompanying chart. · The pink columns at the left of the chart represent the year 2001 available user market. The 3 series shown on the chart represent the market penetration for each of the 3 individual product categories. S~emario 4 Home tJsms Business User~ Total Usam Coasorliml Voice Data Cab, VoiceData Cat~ Voke Data Cat~ City/Both limes cosmects coatiects limes comBects COllects limes comlle~ COBlleds 2001 Market 9,278 7,732 7,732 3,873 1,107 1,107 13,151 8,839 8,839 Year 1 Year2 9,278 4,330 5,026 3,873 620 554 13,151 4,950 5,579 Year 3 9,324 4,546 5,076 3,892 651 559 13,217 5,197 5,635 Year4 9,418 4,774 5,127 3,931 683 565 13,349 5,457 5,691 Year 5 9,512 5,012 5,178 3,971 718 570 13,482 5,750 5,748 Year6 9,607 5,263 5,230 4,010 754 576 13,617 6,017 5,806 Year7 9,703 5,526 5,282 4,050 791 582 13,753 6,317 5,864 Year8 9,800 5,805 5,335 4,091 851 588 13,891 6,633 5,923 Year 9 9,898 6,093 5,388 4,132 872 593 14,030 6,965 5,982 Year 10 9,997 6,397 5,442 4,173 916 599 14,170 7,313 6,042 Year 11 10,097 6,717 5,497 4,215 962 605 14,312 7,679 6,102 16,000 12,000 8,000 4,000 ice Uses 14,312 Project Year 5 8 7 8 gtoll' Table 6: City/Cable/Telephone Network, Projected User Growth · In this scenario, the network serves both incumbents and their existing customers and the current market penetrations for all product categories have therefore been assumed. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 C. Project Analyses page 21 PROIECT COST ESTIMATES Summary of Cost Estimates A summary of the annual costs for each of the four scenarios is presented below in Table 7 and its accompanyhng chart. Detailed cost estimates for each Scenario are given in Appendices 2-5. Alternative AB.mi Cost, $1nilliom Total projed SceprJo Yrl Yr2 Yr3 Yr4 Yr5 Y~6 Ir7 Ir8 Yr9 YrlO Yrll 1. C#I proj~t 3.63 1,4Z 1.38 0.9t 0,85 0.70 0.63 0.48 0,36 0.86 0.06 10.70 2, CitI/cmble pmrtmer 4.98 0.21 0,02 0.08 0.02 0,02 0.02 0.02 0.02 0.02 0.00 3. City/telco partaer 4,84 0.~5 0.08 0.08 0.08 0.09 0.09 0.10 0,10 0.I 1 0.01 5.83 4. ¢l~/l~tl~ parl~s 5.62 0.31 0,09 0,10 0,10 0.11 O, 11 0.12 0.13 0.13 0,01 6.84 3 ~4. CJtylbotll p&~tBers ~ ~'d~4~ ~ 3. City/telco pmtBer · t 4~ 0 / 2. City/cable paftBel t. c~ pro/eot 4567 Project Year 8 9 10 11 Table 7: Summary of Annual Costs for Alternative Project Scenarios Project Capital Costs · Total project construction costs (TPCC) are broken down into backbone infrastructure, distribution system costs. And indirect costs. · Backbone Irurrastructure is further categorized into backbone fiber and backbone electronics. It has been assumed that the entire fiber backbone including all 10 nodes will be constructed in year 1, and that node electronics will be staged to match customer demand and requests for service. · Backbone costs differ between the scenarios, the most expensive being Scenario 1, because of the greater quantity of node electronics needed to interface with end users than in the other scenarios. · The Scenario 1 distribution system will be staged to meet demand over the 10 year analysis period and will consist of direct fiber drops to approximately 250 business and SOHO users, the balance of the distribution system will be copper. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812OO1 C. ProJect Analyses page 22 · Again, the Scenario I distribution system cost is the highest reflecting the construction of a new distribution system versus the integration of one or more existing distribution systems. · Indirect costs are assumed to be 25% of total project costs and cover legal and administrative, engineering, fieldwork, and financing costs. Annual Operation and Maintenance Expenses · Annual operation and maintenance expenses have been grouped into the following categories: - General operating expenses covering staff salaries, office space, equipment, etc., estimated at 12% of gross revenues. - System upgrades/replacements at 5% of cumulative backbone costs beginning in year 4, at which point all of the original warranties for equipment are assumed to have expired. - Network management at 10% of gross revenues. - Network maintenance at 3% of cumulative capital costs. REVENUE ESTIMATES Summary of Revenue Estimates A summary of the revenue estimates for each of the four scenarios is presented below in Table 8 and its accompanying chart. Detailed revenue estimates for each scenario are given in Appendices 6-9. Alternative AmB~m! Revenae~ Smillion Total Project SceBirJo Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Sm 1. City projed 0.41 0.65 0.84 0.96 1,11 1.19 1.31 1.35 1.40 1.43 10.65 2. City/able partmer 1.08 0.95 1.07 1.17 1.26 1.34 1.42 1.49 1.55 1.61 12.94 3. City/tel~o pirtmer 4.07 3.64 3.70 3.76 3.83 3.90 3.97 4,05 4,13 4.21 39.26 4. City/both plrtnen~ 4,84 4.41 4.48 4.55 4.63 4.71 4.78 4.87 4.95 5,04 47.26 2 4. Ci~& pl~e~ I 3. C~/tel~ pa~ev 567 PMjed Year 8 O j0 ~ 1 Table 8: Summary of Annual Revenues for Alternative Project Scenarios METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 C. Project Analyses p~ge 23 Basis for Revenue Estimates · A fundamental basis is that PA Telecom, regardless of scenario, will be a transport network, whose customers will not be individual end users in the city, but rather the service providers such as telephone or cable television companies serving the ultimate end users. · All four scenarios represent a basic initial network consisting of a core fiber backbone and a first stage, upgradeable distribution system. · The first stage distribution system will support digital service line (DSL) transport over copper at up to 12 megabits per second (mbps) and cable modem transport over coaxial cable at up to 30 mbps. · Such transport capabilities over the copper and/or coaxial cable distribution system sections may prove to be adequate for residences and even smaller businesses for many years and are an economical step to begin broadband connectivity in the community. · The direct fiber connections (4% of residential and 30% of business) are an example of what an ultimate all-fiber network would be like. Transport capacities are no longer limited by transmission media but by the capability of system electronics, currently capable of multiple gigabit per second (1000 mbps) transport. · Revenue estimates for direct fiber connections are based on individual and multiple T-1 (1.5 mbps) transport. This is deliberately conservative as large direct fiber users will be paying for T-3 (45 mbps), OC-3 (155 mbps) and even faster transport, the revenue for which is not included in the analyses. Reuenue Sources · PA Telecom will offer service providers access to end users via the network, and charge the providers a "transport fee" based on gross revenue generated, · Reports filed by service providers at the WUTC, indicate their costs to provide service fall into the following three general categories: - Network operations (customer service, billing, engineering, equipment, etc.) - Content or programming, and - The transport system (the network) · The records show that the last category, transport costs, range from 38¢ to 45¢ per revenue dollar. PA Telecom's transport fee to providers has been set at 30% of the provider's retail charge to the end-user. Using cable television as an example, the cable company will charge the individual home user $39 per month (Ultra Basic Package 5) and PA Telecom's revenue would in turn, be $11.70 per month. · Where a partner's last mile infrastructure is used (Scenarios 2-4) PA Telecom's transport revenue is shared equally with the partner. In the cable television example, PA Telecom and the cable partner each receives $7.50, half of the transport fee collected. · Service providers will be asked to pay a one-time connection charge for all new drops, whether fiber or copper, constructed by PA Telecom. It is assumed the providers will pass this charge on to their end user customers affected. · The one time connection charge will cover the cost of the drop and is: - $1,450 per direct fiber drop - $322 per copper drop · The City should stimulate the demand for direct fiber drops by providing incentives such as a low cost financing program to cover the incremental difference between the copper and fiber drops. This will rapidly increase the number of high bandwidth end-users. · Unit prices used for revenue calculations are based on available records of tariffs and provider charges for delivering voice, data, cable television services and expectations of future market prices. METROPOLITAN COMMUNICATIONS C ONSUL"f AN3'$ 4/1 ~)/2003 C. Project Analyses page 24 FEASIBILITY ANALYSES Financing Options For feasibility analysis purposes, and consistent with City participation in the project scenarios, the yardstick of municipal financing, that is, the ability to meet bond issuance requirements, has been used to measure feasibility. Financing options available depend on the alternative chosen for development of the proposed project. Besides participant cash contributions, various means of public and/or private financing are available. The analyses assume the latter option, that the project will be 100% financed. · A City sponsored project would have recourse to public funding sources such as municipal bond issues, supported by revenue (revenue bonds) or taxes (general obligation bonds). Revenue bonds would be the preferred financing method for a City sponsored project. · A City/private partnership alternative can combine features of both public and private financing sources. Care must be observed regarding lending of credit by the City and other legal constraints, but at this time preliminary investigations2° indicate funding can be arranged. The City's participation in any of the PA Telecom development scenarios will be through its Public Works and Utilities Department. For simplicity, the analyses herein assume the issuance of electric utility revenue bonds, even though the eventual financing may take another form2~, especially in Scenarios 2-4, where private partners are involved. Basis of Feasibility Analyses The feasibility analysis of the PA Telecom project is based on the following items: · Electric utility revenue bonds backed by strong financial commitments could reasonably be expected to receive an investment grade rating and an average interest rate for these bonds would be in the range of 8.0% to 10% depending on the strength of the contracts with key customers. · An 8% rate is used for Scenario 1 and 10% for Scenarios 2-4. · The State of Washington recognizes a 7-year life cycle for equipment, a much shorter period than the life cycle of optical fiber. The equipment life cycle is shorter, not because of physical deterioration but because of obsolescence and improved new technology. The term of the financing therefore has been set at 10 years, a reasonable overall assumption. · City electric utility revenue bonds will require coverage of net user revenue to annual debt requirements of at least 1.3 times the debt service requirements. · Revenue bonds will require a debt service reserve fund (DSRF). The required amount in the DSRF is generally the lesser of: - 10% of the par amount of the bonds - 100% of maximum annual debt service, or - 125% of average annual debt service. · The DSRF is used to pay for debt service in the event that net revenues in any one year are insufficient to pay debt service. · The par value of the revenue bonds required, calculated in the feasibility analyses for each scenario (Appendices 10-13), are: - Scenario 1 City project, $10.26m - Scenario 2 City/cable partner project, $5.0m - Scenario 3 City/telco partner project, $4.9m - Scenario 4 City/cable/telco partners project, $5.7m 2°MCC private communication with City Financial Consultant, Steve Gaidos, Gaidos Consulting, 4/3/01 21ibid METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 C. Project Analyses page 25 Project Feasibility Proiect Feas]btEty, expressed as debt coverage (net revenue/annual debt se~ice) and a~nua! cash balances, is summarized tn Table 9, shown wi~h its accompanytn§ charts on the next page. Detailed feasibility calculations for each scenario are gtYen tn Appendices 10-13. AltemaUu Finandng Yr I Yr ~ Tr 3 Yr 4 Ir S Yr 6 Yr 7 Yr 8 Yr 9 Yr !O Yr 1~ Project Scenm4o Sm ht % Trs Oebt Coverlge 1. Cji'/ 10.26 8.0% 10 Na 3.61 2.91 2.49 2,02 1.71 1,45 1,33 1,30 1.34 L54 2. Cit'//Cable 5.00 10.0% 10 n/a 1,32 1.42 2.01 2,52 3,11 3,77 4.51 5,30 6.14 7.05 3.0ty/Telco 4.90 10,0% 10 n/a 3.75 6.56 8.91 10.85 12.61 14.22 15.69 17.05 1830 19.60 4, CSy/Both 5.70 10,0% 10 n/a 3,83 6.78 9.26 11.32 13.18 14.87 16.42 17.83 19,13 20.47 1.City 10.26 8.0% 10 6.63 4.00 2.93 2.88 1.56 1.08 0.69 0.51 0.46 0.53 0.82 2. City/Cable 5.00 10.0% 10 0.02 0.16 0.36 0.87 1.32 1.83 2.41 3.04 3.73 4.46 5.26 3. City/lelco 4.90 10.0% 10 0,06 2,t9 4,44 6.31 7.86 9.26 10,54 11.72 12.80 13,80 14.83 4, City/Both 5.70 10.0% 10 0.08 8.62 5.36 7.66 9.57 11.30 12.87 14.30 15.61 16.82 18.06 25 10 4. City/Both (S$.7m I0~0 10 · 5 3. Cit//Telco (S4.h 10% I0 Ir) 0 2, City/Cible (SS.Om I0~ 10 I 2 3 4 5 6 7 I.Clty(SlO.3m S'A Io70 8 Projed Year 9 10 I1 METROPOLITAN COMMUNICATIONS CONSULTANTS 411812001 D. Findings and Discussion page 26 ANALYSIS FINDINGS Existing Hindrances to Broadband Telecommunications in Port Angeles · The capital expenditures necessary to develop telecommunications infrastructure are the largest limiting factor hindering broadband telecommunications in Port Angeles. · Private providers of telecommunications infrastructure are currently unwilling to make the capital expenditures necessary to provide broadband telecommunications infrastructure to the whole city. · The cost of last-mile connections to each individual home and business is the largest expense in the deployment of broadband telecommunications infrastructure. City Commitment and Opportunities to Enable Broadband Telecommunications · The City of Port Angeles has established an economic development goal that includes evaluation of the feasibility and cost/benefits of enabling broadband telecommunications in the city. · The City's commitment to enable broadband telecommunications is tied to a Community Telecommunications Action Plan and schedule approved by Council on October 17, 2000. · The primary measure of economic development success is the number of ultimate end-users that can be immediately benefited. · Economic development success is the most compelling reason to partner with owners of existing infrastructure to reach the greatest number of Port Angeles residents and businesses. · Concurrent cable franchise renewal and institutional network negotiations provide the City with an excellent immediate opportunity to develop broadband h-tfrastructure through upgrading of the existing cable television infrastructure. · Infrastructure development opportunilies, however, are not limited to the immediate opportunity, and four project scenarios, the original Power Engineers City Backbone project and three additional consortium scenarios, have been investigated for consideration by the City: Original City Backbone Project - Scenario 1: City developed and owned project Additional Consortium Projects - Scenario 2: City/Cable provider partnership (immediate) - Scenario 3: City/Telephone provider partnership - Scenario 4: City/Cable/Telephone consortium · All four scenarios are based on construction of a new fiber optic backbone ring. Scenario 1 includes a new fiber/copper distribution system. In Scenarios 2-4, the fiber backbone is connected to existing distribution networks of last-mile infrastructure to reach the homes and businesses in Port Angeles. Financial Analyses and Findings · The financial analyses of the options show that all four scenarios are feasible. · All three consortium projects (Scenarios 2-4) however, are superior to the original City stand-alone project (Scenario 1) in meeting the City's economic development goals, as well as providing cost savings, greater returns and mitigation of risk. · Over the analysis period of 10 years, the total capital cost of the City project (Scenario 1) is the highest at $10.70 million. · For the consortium projects, total capital costs range from a iow of $5,32m for Scenario 2, $5.83m for Scenario 3 to a high of $6.84m for Scenario 4. These costs are detailed in Table 7. · Ail four scenarios would require financing to bridge an initial shortfall in available funds during project construction. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 D. Findings and Discussion page 27 · The financing required, based on a 10 year repayment period and interest as shown is: - Scenario 1: City developed and owned project $10.26 million (8% interest) - Scenario 2: City/Cable provider partnership $5.0 million (10%) - Scenario 3: City/Telephone provider partnership $4.9 million (10%) - Scenario 4: City/Cable/Telephone consortium $5.7 million (10%) · Revenues from the project consist of one-time connection charges, and a transport charge calculated as a percentage of provider product and service revenues. · Over the analysis period of 10 years, the total revenues of the City project (Scenario 1) are the lowest at $10.65 million. · For the consortium projects, total revenues range from a low of $12.94m for Scenario 2, $39.26m for Scenario 3 to a high of $47.26m for Scenario 4. These revenues are detailed in Table 8. · Feasibility for the projects is measured by the requirements for municipal revenue bond financing, that is by debt coverage and annual ending cash balances. · Debt coverage for the City project (Scenario 1) is the weakest, not exceeding 1.3 until year 9. Debt coverage in the initial 8 years is artificially maintained above 1.3 by the large front end financing required in year 1 to supplement the inadequate revenues. · Debt coverages for the consortium projects are very strong, ranging from 1.32 to 7.05 for Scenario 2, from 3.75 to 19.6 for Scenario 3 and from 3.83 to 20.47 for Scenario 4. These figures are detailed in Table 9. · Ending balances for the City project (Scenario 1) are the weakest, not showing profitability until year 9. Positive ending balances in the initial 8 years are artificially maintained by the large front end financing required in year I to supplement the inadequate revenues. · Ending balances for the consortium projects are very strong, showing profitability immediately and increasing annually to $5.26m for Scenario 2, to $14.83m for Scenario 3 and $18.06m for Scenario 4 in year 10. Conclusions The findings above indicate that any of the consortium projects will meet the City's goals, be superior and easier to implement than a standalone City developed and owned infrastructure project. The findings also indicate the City has a good existing opportunity to develop broadband infrastructure through the current cable franchising renewal. At the minimum, the opportunity can yie]d a limited non- commercial institutional network. A City developed network, although feasible, is therefore the last choice that the City should consider. DISCUSSION Strategic Direction Based on the findings of this report, a strategic direction is recommended, and is shown graphically in Figure 4. The chart indicates that the City should proceed with Scenario 2 (City/Cable partner) and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Concurrently, the City should also proceed with work on Scenarios 3 and 4 for the following reasons: · The City should keep developing all available options. The concurrent negotiations will also maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · Although the parties are currently very cooperative, there is no guarantee that the Scenario 2 negotiations with Northland will achieve the schedule or all the results desired by the City. Proceeding concurrently with other consortium negotiations will provide the City with ready alternate options and protect the critical schedule. · One example of the need to keep developing all the City's options is the City's ongoing discussions with CenturyTel, a stakeholder in the Sappho Gap project, previously described on page 3 of this METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 D. Findings and Discussion page 28 report. The project is a finalist for state grant funding and if funding efforts were successful, CenturyTel would become an even more significant potential partner for the City. The opportunity to develop the City's relationship with CenturyTel should be grasped now and should not be delayed. · Lining up a potential CLEC partner such as CenturyTel is consistent with the "quick strike" strategy embedded in all scenarios. The strategy is to build high bandwidth fiber drops to City, educational and other pubtic institutional users as well as major commercial users in the first years of any scenario. This enhances the ability for a CLEC such as CenturyTel to offer competitive services early on to public and business users, their targeted market. Should the negotiations with Northland under Scenario 2 be successful, the concurrent other consortium negotiations could be terminated, although as a practical matter, they will probably continue, transitioning Scenario 2 into Scenario 4. If none of the partner or consortium scenarios is successful, the City still has the option of proceeding by itself under Scenario 1. hcommeBded St~lteslc DIrectiem i '~ Plltlemkip NegetletleBs (SceBirie Z) / CATV Provider Stile Z Future Nu"~d~ & Cable Operator Inte~stS Repod Proposal Oity Neg0tiaion$ Informal/Formal i~lo~orma~ Neads & ~nterests ~roposaJ Broadband Capability of Reasonably Met? Frand~se Ordinance Stop Olfle- NegotiaU~s Other CoBsor#em IlegenatieBs (Scellrlel 3 and 4) Consortium Consortium Planning Proposals Structure and Negotiaions Policy and Needs & Interests Planning Broadband Capability -- Agreement Reasonably Net? Acceptance Fundional Operations Pariner Solidtatlon No City PeYelepIBllt (SceBm~e 1) Figure 4: Recommended Strat~jic Direction METROPOLITAN COMMUNICATIONS CONSULTANTS 4/1812001 D. Findings and Discussion page 29 Work and Operations Planning Framework The framework for a work plan for negotiation of the cable television franchise and development of a consortium project, covering four major task areas, arranged by type of work and anticipated timing is given in Table 10. A. Strategic Direction f. Accept Business Plan Analyses X Council UN:, City Council Z. Approve Recommendations X Council BAC, City Coundl 3. ContinueNegutiationsw/Nocthland ][ ~ · 9/3C PW&U outsourceasreq'd 4, Continue Developing Provider Relationships ][ · · City staff outsource as req'd I. Comorltm Plannlq 1. Structure and Organization X City staff outsource as req'd 2. Policy and Planning ][ City staff outsource as req'd 3. Functional Operations X City staff outsource as req'd a. Management & Administration ][ City staff outsource as req'd b. Financial and Accounting X City staff outsource as req'd c. Legal and Regulatory X City staff outsource as req'd d. Technical Services ][ City staff outsource as req'd e. Construction and Maintenance X City staff outsource as req'd f. Product Development ][ City staff outsource as req'd g. Marketing ][ City staff outsource as req'd h. Customer Relations X City staff outsource as req'd A. ConsorUum Par~er Solicitation 1. Prepare Consortium RFP X PW&U outsource as req'd ~.. Issue Consoriium RFP II PW&U outsource as req*d 3. Evaluate RFP Responses J( City staff outsource as req'd 4. Determine Strategic Relationships ~[ City staff outsource as req'd S. Select Partners for Consortium Negotiations ][ I City staff outsource as req'd B. Conso~tiulm BIIIdlBs 1. Develop Consortium Agreements · City staff outsource as req'd a, Define Member Roles X City staff outsource as req'd b. Spedfy Product/Services Areas X City staff outsource as req'd c. Set Pdcing Schedules I J[ City staff outsource as req'd d. Financing Commitments · City staff outsource as req'd e. Timeline Agreements X City staff outsource as req'd Z Negotiate Agreements X City staff outsource as req'd 3. Conclude Agreements X City staff outsource as reg'd 4. Establish Consortium X City staff outsource as req'd 5. Begin Operations X City staff outsource as req'd ·ores: CMgr -- Consortium Manager (City of Port Angeles) PW&U - Public Works and Utilities CM--- Consortium Member UAC -- Utility Advisory Committee Table 10: PA Telecom Consortium Operations Framework M ~I'ROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2001 D. Findings and Discussion page 30 A. CoBsortium OperitioBs 1. Operations Setup ][ CMgr outsource as req'd Z Network Planning % CMgr CM or outsource a, System Standards and Specs % CMgr CM or out~ource b. Comprehensive Plan % CMgr CM or outsource c. Prepare Capital Construction Program % CMgr CM or outsource d. Prepare Operating Budget % CMgr CH or outsource 3. Project Design % % CMgr CH or outsource a. Transmission Infrastructure % % CMgr CM or outsource b. Network Equipment % % CMgr CM or outsource 4. Project Financing % % CMgr CH or outsource a, Review for Financing Constraints l[ % CMgr CH or outsource b. Opinion on Proposed Financing % CMgr CM or outsource c. Complete project Financing J[ CMgr CM or outsource d. Sources & Amounts of Owner Capital Il CNgr CH or outsource 5. Customer Development J[ > > > > CMgF CM or outsource a. Solicit Prospective Customers % ~ ~ ~. > CMgr CM or outsource b. Sign-up Key Customers % > ~, CMgr c. Execute Service Contracts % ~, ~. CMgr 6. Project Construction 1[ ~ CMgr a, Solicit Bids % CMgr outsource as req'd b. Construction Contract Awards % CMgr outsource as req'd c. ConstnJct Backbone Facilities % · % CMgr Contractor, CM d, Construct Network Operating Center ~' % CNgr Contractor, CM e. ConsmJct Backbone Nodes % ~ % CMgr Contractor, CM f. Construct Distdbution Facilities % · % CMgr Contractor, CM g. Procure and Install Equipment % J[ CMgr Contractor, CM h. End to End System Tests I1 CMgr Contractor, CM L Operator Training ]~ CMgr Contraclor, CM j. project Acceptance % CMgr 7. Begin Network Operations % > > ~ CMgr CMgr -- Consortium Manager (City of Port Angeles) PW&U -- Public Works and Utilities CM--- Consortium Member UAC-- Utility Advisory Committee Table 10: PA Telecom Consortium Operations Framework (continued) Ongoing City Telecommunications Initiatives Beyond initial development of the project and on an ongoing basis, the City can make Port Angeles attractive to both telecommunications users and providers. This should be done regardless of what decisions the City might make regarding infrastructure development. City action, such as leveling the playing field to attract competition, creating a favorable telecommunications environment and developing community readiness will enable the City and the Port Angeles community to take full advantage of whatever irrfrastructure is eventually realized. The City has already taken action on several of these items and may consider collaborating with interested community and economic development organizations and groups to pool resources and efforts in pursuing these objectives. METROPOLITAN COMMUNICATIONS CONSULTANTS 4/18/2001 E. Recommendations page 31 RECOMMENDATIONS The following recommendations are made for consideration and action by the City of Port Angeles: Administrative and Procedural · The City should review this report and analyses and satisfy itself that it concurs with the findings and recommendations proposed. · The City should invite selected community representatives to assist it in reviewing the report. · The City should request the City Utility Advisory Committee to review and recommend City Council acceptance of this study. · The City should assign responsibility for implementing individual work plan tasks to qualified and appropriate parties. Preliminary assignment suggestions are shown in Table 12. Policy and Strategic Direction · Proceed with a telecommunications network consortium project. · The City of Port Angeles should take a strong, pro-active leadership role Ln developing and managing the consortium. · The infrastructure project should plan to connect the majority of end users through private partuer last-mile infrastructure but concurrently offer the option of direct fiber drops to larger customers needing more bandwidth and willing to pay for the required fiber drop. · The City should stimulate the demand for direct fiber drops by providing incentives such as a low cost financing program to cover the incremental difference between the copper and fiber drops. This should rapidly increase the number of high bandwidth end-users. · The City should focus on attracting Qwest, Olypen, other owners of infrastructure, and telecommunication service providers to a City led infrastructure development consortium. · In dealing with prospective partners, the City should provide incentives and determine how it might build their markets to make their participation in a consortium more attractive and justifiable. · The City should undertake development of a project on its own project only as a last choice, in the event no others will step forward or join it in the project development. · At a minimum, should unforeseen difficulties arise with development of the broadband infrastructure, the City should strive to obtain an institutional network for non-commercial public use. Broadband Infrastructure through Cable Television Franchise Renewal · The City should use the opportunity provided by the current cable franchise renewal proceedings and aggressively negotiate with Northland Cable to develop broadband infrastructure through upgrading of the existing cable television infrastructure. Consortium Implementation · The City should keep developing all available options by concurrently proceeding with work on Scenarios 3 and 4. · The concurrent negotiations will maintain a competitive atmosphere that will be an incentive to Northland as well as other prospective partners. · The City should formalize the process of building the consortium to maintain implementation time frame goals. · Prepare and distribute a Request for Partners (RFP) document to private telecommunications companies. A sample table of contents for an RFP is given in Appendix 15. · The RFP process should run in parallel and in close coordination with the Cable Franchise renewal process currently underway. · Delay the engineering design phase of the project, awarded to MCC, until the consortium is finalized. · Begin planning for the capital budgeting process. METROPOLITAN COMMUNICATIONS CONSULTANTS 4118/2001 The Port Angeles Telecommunications Network Business Planning Analyses Appendices April 20, 2001 This document contains proprietary materials furnished by MCC to the City for internal use and is not intended for distribution Prepared for City of Port Angeles P.O. Box 1150 321 East Fifth Street Port Angeles, WA 98362-0217 METROPOLITAN COMMUNICATIONS CONSULTANTS Seattle: 5847 McKinley PI. N., Seattle, Washington 98103 Te&: 206.522.6778 Fax:206.522.6777 Tacoma: 1201 Pacific Avenue. Sulte 1702, Tacoma, Washington98402 Tel: 253.272,1636 Fax: 253,272,1482 www. mcco.com Appendices page 34 PA TELECOM THE PORT ANGELES TELECOMMUNICATIONS NETWORK BUSINESS PLANNING ANALYSES APPENDICES April 20, 2001 Appendices 1. Project Feasibility Summary ................................................................................ 35 2. Project Capital Costs - Scenario 1 City Project ................................................... 36 3. Project Capital Costs - Scenario 2 City/Cable Partner .................................... 37 4. Project Capital Costs - Scenario 3 City/Telco Partner ...................................... 38 5. Project Capital Costs - Scenario 4 City/Cable/Telco Partners ...................... 39 6. Annual Revenues - City Project ......................................................................... 40 7. Annual Revenues ~ City/Cable Partner ............................................................ 41 8. Annual Revenues - City/Telco Partner ............................................................ 42 9. Annual Revenues - City/Cable/Telco Partners .............................................. 43 10. Project Feasibility - City Project ......................................................................... 44 11. Project Feasibility - City/Cable Partner ............................................................ 45 12. Project Feasibility - City/Telco Partner ............................................................. 46 13. Project Feasibility - City/Cable/Telco Partners ............................................... 47 14. Qwest Port Angeles Laurel Street Central Office Switch Data ....................... 48 15. NoaNet Route Map ................................................................................................ 49 16. Sample Outline Request for Consortium Partner Proposals ............................ 50 17. Telecommunications Needs and Solutions Workshop ...................................... 51 M[TROPOLITAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 4/1812001 Appendice~ page 35 Beginning Balance D260,000 6,628267 5,524,897 4,455,098 3,804,EM0 3,093,566 2,609,974 22.18,339 2,034,499 1,985398 2,056,377 Cash n/a &oss Revenues n/a 4062.16 649~89 840330 962,536 1,113A76 1,194,982 1,305,423 1,346,429 1,396,590 1,434260 Annual Funds AvaHable IO,Z6O,O00 7~34,483 6,173,986 5295,628 4,767,175 4207,042 3304,957 3,523,762 3J80,928 3,382,488 3,490337 Annual Cos~ 3,631,733 1,509,587 1,718,887 1,490,989 1,673,609 1,597,068 1,586,617 1,489,263 1,395,030 1,326,111 1,139,117 Amual Net Revmue 6,628267 5324,897 4,455,098 3~4,640 3,093,566 2,609,974 2,218,339 2,034,499 1,985398 2,056,377 2,381,520 Debt Service 0 1,529,043 1,529,043 1,529,043 1,529,043 1,529,043 1,529,043 1,529,043 1,529,043 1,529~43 1,529,043 Endin~ Balance 6,628,267 3,995354 2,926,056 22.75,597 1,564,524 1 ~80,932 689297 505,456 456~55 527,334 822,478 ~1~ ~11~ 3.61 2.91 2.49 2.02 1.71 1,45 1.33 1.30 1.34 1.54 Beginning Balance 5,000,000 20,629 659,733 1,230,78~ 1,742,438 2,183,644 2,698,333 3275~989 3,913,150 4,599,371 5,331,969 Cash 0 0 0 0 0 0 0 0 0 0 0 Gross Revenues 0 1,082,783 953,106 1,066338 1,167,018 12.62,687 1,344389 1,422,668 1,487,071 1,548,047 1,605,650 Annual Funds Available 5,000,000 1,103,412 1312339 2297,625 2,909,456 3,446,331 4,043222 4,698,656 5,4002.20 6,147,418 6,937,619 Annual Costs 4,97937~ 443,679 382.051 555,187 725,812 747,999 767233 785,507 800))49 815,449 812~88 Annual Net Revmue 20,629 659,733 1230,788 1,742,438 2,183,644 2,698,333 3,275,989 3,913,150 4,599,371 5,331,969 6,124,731 Debt Set, ce 0 500,000 8~'203 868203 86~,203 868'203 868~03 868'203 868~03 868203 868203 Endin~ Balance 20,629 159,733 362,585 874,235 1,315,441 1330,130 2,407,786 3,044,947 3,731,168 4,463,766 5256,528 ~M t,.....~._ 1.32 1.42 ~..01 2.52 3.11 3.77 4.51 5.30 6.14 7.05 Beginning Balance 4,900,000 63,906 2,987,146 5232,704 7,107,193 8,654322 10,059,482 11,340,951 12,514371 13,595,497 14,595.435 Cash 0 0 0 0 0 0 0 0 0 0 0 Gross Rev~ues 0 4,069,917 3,635355 3,699,105 3,764,EM9 3332277 3,902,080 3,974356 4,048,605 4325,533 4205,053 AnnualFu~dsAvailabie 4,900,000 4,133,824 6,622,701 8,931~09 10,871,842 12,486,599 13,961,562 15,315,107 16,563,475 17,721~)30 18300,489 Annual Costs 4336,094 1,146,678 1,389,997 1,824,616 2,217,520 2,427,118 2,620,611 2,800236 2,967,978 3,125,595 3,1702.30 Annual Net Reve~ue 63,906 2,987,146 5232,704 7,107,193 8,654,322 10,059,482. 11,340,951 12,514371 13,595,497 14.595,435 15,630259 Debt Se~ce 0 797,452 797,452 797,452 797,452 797,452 797,452 797,452 797A52 797,452 797,452 Endin~Ba~ance 63,906 2,189,693 4,435,252 6,309,740 7356,869 9,2.62,029 10,543,499 11,717,418 12,798,045 13,797,983 14332,806 ~ t,.....~. 3,75 6.56 8.91 10.85 12.61 14.22 15.69 17.05 18.30 19.60 BeginringBalance 5,700,000 84,778 3,550,749 6,289,434 8,588,302 10,498,937 12227,819 13,797,952 15229329 16,540,758 17247,152 Cash 0 0 0 0 0 0 0 0 0 0 0 g-oss Revenues 0 4337,629 4,410,319 4,480,960 4,553,634 4,628,429 4,705,434 4,784,745 4366,463 4,950,691 5~337,539 AmualFundsAvailabte 5,700,000 4,922,407 7,961,068 10,770,394 13,141,936 15,127,366 16,933253 18,582,697 20,096~91 21,491,449 22,784,691 Annual Co.ts 5,615,222 1,371,658 1,671,634 2,182,093 2,642,999 2399,547 3,135,301 3,353,068 3,855,333 3,744297 3,792,159 Annual Net Revt~Je 84,778 3,550,749 6,289,434 8,588,302 10,498,937 12,227,819 13,797,952 15229,629 16,540,758 17,747,152 18,992,532 Debt Se~,~ice 0 927,649 927,649 927,649 927,649 927,649 927,649 927,649 927,649 927,649 927,649 EndinQBalance 84,778 2323301 5,361,785 7,660,653 9,571289 11300370 12370,303 14,301,980 15313,110 16319,504 18~o4,B83 De/at ~'_ _ _ ...eee~e 3.83 6.78 9.26 11.32 13.18 14.87 16.42 17.83 19.13 20.47 Appendix 1: Project Feasibility Summary METROPOLITAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 4/18/2001 Appendices page 48 Central Office Name Port Angeles City Port Angeles Equal Access Date ! 2/I 7/88 Tande~ Switch STI'LWAO6CgT Horizontal Coordinates 9065 Existing Switch Type DMSIO0 Replacement Switch Date Replacement Switch Software LECO 13 Business NALs 6454 tSDN Date 04/24/95 SS7 Date 06125194 Total Usage 38471669 Data ResMeatlal Baaimess Nehvork Access Unes (NALs) 15,463 6,454 Oty area within PA Exchange' ~sumed 60% Assumed 60% Lines within Cib/ 9,278 3,873 Lines/unit 1.2 3.5 Total units within City 7,732 1,1 o7 Appendix 14: Qwest Port Angeles Laurel Street Central Office Switch Data22 22 h~tp:/ /www. uswest.com/c~-bin/iconn/icorm, cent~aJ.pl METROPOLITAN COMMUNICATIONS CONSULTANTS Proprietary and Confidential 4/18/2001 Appendices page 49 Appendix 15: NoaNet Route Map METROPOLITAN COMMUNICATIONS CONSULTANTS Proprietar~ and Confidential 4/18/2001 Appendices page 50 Appendix 16: Port Angeles Telecommunications Network Sample Outline Request For Consortium Partner Proposals Introduction Purpose of the Request Background Scope of Project Goals Procedure for Responses Inquiries Submission of Responses Response Process Timeline Confidentiality of Responses Business Proposition Description of the Business Business Summary Products and Services Costs and Revenues Projected Returns Network Description General Description Design Criteria Network Management Implementation Scheduling Partnership Partnership Description Organization Partnership Management Partnership Policies and Activities Data Requested from Respondents intentions and Capabilities Role Des/red Desired Market Segments Competencies, Capabilities and Strengths Ability to Meet Partnership Requirements Respondent2s Data Appendices Map of Proposed Network METROPOLITAN COMMUNICATIONS CONSULTANTS Proprieta~j and Confidential 4/18/2001 Friday March 3,0, 2001 Telecornt~unicatio~s Needs and $olut~o~$ Workshop S WORKSHOP ~"~,~""~"~'*"~.~'~'~~"" Appendix 17: Telecommunications Needs and Solutions Workshop page 52 Den-Ree Productions 670 Lotzgesell Rcmd Sequim, WA 98382 Ph: (360)- 685-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP, 3/30/01 WORKSHOP F ORMA T/PURPOSE: In an effort to analyze the community and customer support for the establishment of a community fiber optic, or telecommunications backbone, the City of Port Angeles contracted with Den-Ree Productions of Sequim, Washington to organize a process to conduct group interviews, or focus groups to obtain input. Through working with the City of Port Angeles and Metropolitan Communications Consultants, Den-Ree Productions finalized a list of 10 specific questions, focusing on different aspects of the telecommunications backbone plan. These ranged from how such a network could be employed in the community, to the respective advantages and disadvantages of such a network (see detail in summary report for a listing of all questions). Den-Ree Productions met with two focus groups and led them through a discussion on several topics, starting with broad questions, gradually moving the group to more focused discussions. The workshop was held in Port Angeles on Friday, March 304, 2001. The discussion was broken into 2 different workgroups in order to improve the responsiveness in each session and the deployment of the discussion topics. Each of these sessions lasted approximately 2 hours using the following agenda: 1). Introduction of participants 2). Brief explanation of the city's planning effort 3). Interactive discussion and evaluation of key questions In order to preserve objectivity, participants were only allowed to attend one of the two workshops, thereby entering the process from a flesh perspective. During the workshops, participants were presented each question and then asked to write their responses on cards that were then collected and shared with the group. The discussion allowed the panel to help the facilitator group the responses using a process known as "storyboarding", posting the response cards under general headings. Once a series of questions were completed in this manner, participants were then asked to come forward and analyze ali of the responses on the storyboard. Using stickers and a point value system, participants were able to make one final, "close-up" review of the cards for each question and assign top priority to the responses they felt to be most critical to each question. This not improved the dynamics of the discussion, but allowed for a "second look" by viewing all of the responses collectively as they were prioritized. DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 53 The cards were then collected off the board and point values calculated (see summary report). In addition, notes and audio recordings of the workshops were collected to provide an additional, detailed record of the process. WORKSHOP PARTICIPANTS: In selecting the workshop participants, the City of Port Angeles and Den-Ree Productions endeavored to include a broad range of both potential customers of the telecommunications backbone, but also those who represented specific segmenls of the population such as local government, health care, small business and the public-at-large. Workshop "A" 10am to 12noon Bob Jensen- Angeles Communications Bill Robards- Excel Utilities Construction Alan Bentley- Port Angeles Business Association Dan Gouin- Clallam County Central Services Bill James- Port of Port Angeles Dave Meyer- Clallam County Central Services Steve Baxter- Port Angeles School District Evan Boyd- Olympic Medical Center Workshop 'B' lpm to 3pm Jerry Nichols- Port Angeles Chamber of Commerce Sandi Jerome- Science, Technology, Manufacturing Association Greg Scherer- Pacific Rim Hobbies (small business) Emma Janssen- Peninsula College Gary Smith- Olympic Medical Center Katy Stansifer- Clallam County Economic Development Council Eileen Knight- Port Angeles Downtown Association (business) Joan Sargent- former Port Angeles Mayor (citizen-at-large) Paula Johnson- First Federal Savings and Loan Dan Englebertson- Clallam County/Pencom Kathy Prince- Daishowa America By incorporating a broad range of workshop participants, the process was able to include input covering not only the operation of the telecommunications backbone, but general opinions about the projects' viability and expense from leading community members representing a variety of viewpoints. In addition to the workshop participants, the event also included an hour-long panel discussion with local telecommunications service providers representing telephone and data carriers, cable television and local Internet service providers. They included: Pete Grigorieff Northland Communications John Utley Fairpoint Communications Fred Mitchell Clallam County Public Utility District Ned Schumann Olympus Net Terry Kennedy Olypen Tony Nicholson Century Tel Sheldon Koehler Tenforward DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 54 Den-R~e Productions 670 Lotzgesell Road Sequim, WA 98382 Ph: (360}- 683-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP- EXECUTIVE SUMMARY Overall, 19 participants took part in the Telecommunications Workshop on March 30, 2001, generating between 250 and 300 response cards on 10 key questions that were developed for the focus group component of the business plan. (These are detailed in the Detailed Report). The primary findings are as follows: 1. What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? Participants first considered their present, unserved telecommunications needs with the demand for high-speed connectivity clearly ravking as the most important demand that's not being met with the present infrastructure. Participants were then asked to list the areas where they had specific telecommunications needs in their organizations today, or in the community as whole. As with many of the questions throughout the workshop, the panel clearly said they not only want "fast" telecommunications services, but also want them at "affordable" prices. Finally, the groups were asked how their telecommunication needs could change in the future. The prospect for the convergence of combined telecommunications services (TV, phone, Internet) emerged on top. Business people who participated further expected the need to compete, or offer new services via the Internet. 2. How would your organization use a broadband wide area network if it were available and affordable? Workshop participants were asked to consider how they might use the telecommunications backbone if it were available now, at an affordable price. The morning panel's involvement in local government clearly showed with the top selection favoring remote cormecfivity and service to offices and departments scattered at various locations around the community. Other top responses included the prospect for video conferencing and remote training and education for people who cannot travel to attend school. 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense ur should the City pursue citywtde development? How could an investment in a eltywlde project be justified? Participants in the morning workshop dearly believed that the network should be developed beyond a "limited model", in order to include more population in potential services and improve economic impacts throughout the community, although cost was mentioned as a factor. The afternoon work group suggested a "limited" deployment might be a possible path for initial network development, using partners for expansion. At the same time, the participants felt a large deployment is necessary if the network is going DEN-REIt PRODUCTIONS 4118/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 55 to have the greatest benefit, in the shortest period of time. In fact, they saw partnerships as key to overcoming service limits. Participants felt economic development and education opportunities were a .primary means of justifying the network in a community network. 4. What are the advantages/disadvantages of a City partnership in a broadband telecommunications backbone to enable broadband services for business? Not surprisingly, the issue of "cost" topped the list of "advantages". When it came to disadvantages, the functions and use of a joint network, such as security of documents and information management were mentioned. The afternoon group saw specific advantages to such a partnership, not the least of which was the rate of brosdband deployment, and the use of existing technology, although the panel expressed concerns about working out the details of such a partnership. 5. Is 'open access" and competition important for the advancement of broadband teleconununlcatinns ser~ces? The morning group simply said "yes", open access was important. The afternoon group felt open access could benefit the consumer, with more options, better service and lower prices. 6. What criteria should the City use to evaluate proposals to develop a broadband telecommunications infrastructure? Quality of Service, cost and Return on Investment emerged as the top considerations, with other suggestions such as "access to many or all", and consideration of existing resources and how to integrate those into the network. Other factors included reliability, technology and experience (of potential partners). 7. What needs do public, educational and governmental organizations have that may go ~ed if a broadband infrasl~acture is not developed? The morning group dearly showed a determination that the network should be constructed, again with the cost of development a theme in their responses. The afternoon panel, with a greater number of business representatives, expressed concerns that the lack of a network would slow economic growth and hurt the community's ability to compete in attracting new business. 8. What obatacles would need ~o be overcome with "last mile" infrastructure? In this question, participants were allowed to freely touch on a variety of challenges that must be bridged with the "last mile" deployment of a community network. The cost of that development was the primary concern, but others worried about the time for constroction, administration, how to avoid construction disruptions to the community and convince people of the importance of building the network. 9. What types of bnsines~/'rodnsh'y could we attract to PA if broadband services were available? These responses touched on a variety of business sectors that need broadband in order to compete in today's markets including call centers, engineering/architectural firms, high~tach research and development and any "businesses that use Internet distributed & developed products & services." Some suggested the network could attract "any business who brings employees who have high expectations in the area of high speed connection & services". 10. Should the City be involved in providing telecommtmications services, or only be the service provider of last resort? The groups were asked to separate their answers into subheadings of "advantages" and "disadvantages" of the City of Port Angeles actually providing the telecommunications service. Generally, most in the morning workshop saw the disadvantages of this scenario, saying, "government should not be competing as a private enterprise". But the afternoon panel felt that the city could/should actually take steps to insure the availability of service if necessary, although they expressed concerns about the city's expertise and expense of such a deployment. D£N-R£E PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 56 TELECOMMUNICATION SERVICE PROVIDERS PANEL DISCUSSION During the period of time between workshop sessions, participants also had an opportunity to hear a one hour panel discussion involving telecommunication service providers representing telephone and data services, cable television and local Internet service providers (see background report for a complete listing). The various representatives related steps their firms were taking to improve, or expand their services in the future. All related an interest in expanding service offerings, although they said that costs of service must be taken into account. Some did express an interest in partnering with the city and showed support for "open access" to a local telecommunications network. Den-Ree Productions 670 Lotzgesell Rood Sequim, WA 9858~ Ph: (360)- 683-2677 TELECOMMUNICATIONS NEEDS AND SOLUTIONS WORKSHOP- DETAILED REPORT POINT SYSTEM: During the workshop, participants were asked to rank the individual response cards to each of the questions, using stars with the following point system, with the most points awarded to the responses they felt best reflected their primary feelings or opinions under each question. Each participant was allowed to have a gold, silver and blue/red vote for each question heading (or sub-heading). Gold = 5 points Silver = 3 points Blue/Red = 1 point AM Workshop (See listing of participants in previous section) Question #1 1). What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? Because of the complexity of this question, the group was asked to break their responses into subsections. DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 57 Unserved Needs: Participants first grouped their present, unserved telecommunications needs with the demand for high-speed connectivity clearing ranking as the most important demand that's not being met with the present infrastructure. -High speed connectivity to remote locations, i.e. - tiber, TI, etc. *26 points* Other responses included not only the demand for broadband service, but also the desire to use such bandwidth to implement additional services, such as video/voice/data throughout the community. - "DSL or equivalent services" '18 points* -"Looking to enhance video to the citizens (streaming video to citizens)" '16 points* -"Fiber to remote locations" *6 points* -"Connection to roads and fairground" *4 points* -"Voice and video services across IP network internal or external" *1 point* Other ideas mentioned in this subsection included: -"Broadband to all schools- voice, data, and video" -"Fiber/broadband connectivity all sites, 4 sites unserved" Needs Today: Participants were then asked to list the areas where they had specitic telecommunications needs in their organizations today, or in the community as whole. As with many of the questions throughout the workshop, the morning panel clearly said they not only want "fast" telecommunications services, but want them at "affordable" prices: -"Affordable high speed service" *24 points* -"Organization becoming more dependent on remote locations via WAN connections" *10 points* -"56K > $50 month" *9 points* Others related that present changes in their organizations were impacting their demand for affordable, high capacity bandwidth: -"Changing slowly, need lower cost, more capacity" *6 points* -"Change is a constant thing. There is always a demand for bandwidth" *5 points* -"Always changing, more need for high speed Internet, SAN, video" *3 points* Other responses in this subsection included: D£N-REE PRODUCTIONS 4/181200 1 Appendix 17: Telecommunications Needs and Solutions Workshop page 58 -"Wireless DSL > $50" -"Yes: A. Work reaches us via Internet B. Billing is via Intemet" -"POTS" -"Reasonably priced, T-1 speed data communications connections - for remote, small # users, locations" -"T-1 connectivity available but at cost-prohibitive rates for small # of users" Change: Finally, the group was asked how their telecommunication needs were changing in the future. The prospect for the convergence of combined telecommunications services clearly emerged on top: -"People want combined services: T.V., Phone, Intemet, etc." *28 points* -"Needs changing - will require faster service in order to compete on Internet' '13 points* -"Connection courthouse to Juvenile, D&F, Roads yard, fairground" *4 points* Other responses to this sub-heading for question one focused on specific connections to government locations in the community, especially from Clallam County's standpoint, with the desire for video conferencing capabilities to various locations, such as the Clallam County Juvenile Detention Center, Forks, Sequim, the Clallam Bay Prison, remote office locations like the Clallam County Drug Task Force and other facilities off the Olympic Peninsula. Question #2 2. How would your organization use a broadband wide area network ff it were available and affordable? With the next question, workshop participants were asked to consider how they might use the telecommunications backbone ff it were available now, at an affordable price. The morning panel's involvement in local government clearly showed with the top selection favoring remote connectivity and service: -"Link voice, data, video to all internal locations & expand to remote citizens for better service (county services & offices)" '21 points* -"To link remote locations to main network, voice/video/data" *10 points* -"Video delivery SAN's (storage area networks) - voice over IP distance learning (bandwidth capacity)" *9 points* Others suggested the network could be beneficial to local business in reaching customers, providing improved video conferencing or linking existing customer locations: -"Business could use broadband - area network to offer goods and services to all in area" *6 points* -"Video conf. (more efficient - replace dial-up)" *4 points* DEN-RE£ PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 59 -"Link existing customer sites... (Transfer data business)" *3 points* Other ideas including use of the network for better connections to the Internet, moving data among multiple locations at a better price, or performing services such as invoicing, permitting, bidding and other work throughout the community. Question #3 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense or should the City pursue dtywide development? How could an investment in a cltywlde project be justified? As with Question #1, this issue was broken down into subheadings to facilitate discussion of the importance of the community developing the network. Limited Investment: First, participants were asked to consider whether there should be a limited development of the backbone, i.e. just to those customers or areas of the city that made strict economic sense. Only one suggestion was made that this be done throughout a partnership with primary users and organizations. -"Citywide develop partnerships with primary/large users/org.' *3 points* Citywide: Participants in the morning workshop clearly believed that the network should be developed beyond a "limited model", in order to include more population in potential services and improve economic impacts, although cost was mentioned asa factor: -"It is important, but as county government we can't stop at the city limits" *28 points* -"Broadband services are important to all, county-wide development shall be considered" *11 points* -"Yes, extremely - Citywide development may spread up-front costs over more users, thereby lowering costs" *9 points* -"Hard to say? The locations within the city have the capacity but cost is prohibitive. Citywide and beyond" *7 points* -"Yes, citywide development, investment necessary economic development" *5 points* Justified: Finally for Question #3, the panel was asked to consider factors that could justify the development of the citywide network. Most clearly agreed with the statement that the network would be an incentive to economic growth and educational opportunities, lowering long range costs by shared use of the network: DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 60 -"Economic growth incentive better more education. Opportunities long range cost savings - sharing" *23 points* -"Partnership" *9 points* Others said it might be difficult to justify spending the dollars necessary to build the network, but felt a public vote might be helpful in building support for the project: -"Public support (vote?)" *9 points* -"Have the public vote on it, perception is everything" *8 points* -"Increased productivity "or" enhanced efficiencies, $'s are hard to quantify" *4 points* Others suggested that the network could be justified through economic development, and that the project "probably can't be justified solely on financial basis, however, government agencies have obligations to provide some services, which are needed but can't be totally justified". Question #4: 4. What are the advantages/disadvantages of a City partnership in a broadband teleconununicatlons backbone to enable broadband services for business? For this question, participants were asked to break their responses into "advantages" or "disadvantages". Advantages: Not surprisingly, the issue of "cost" topped the list of advantages (and was a factor with every response from the group under this subheading): -"Lower cost" *25 points* -"Expanded opportunities, lower cost (deliver goods)" *8 points* -"Lower investment to City, benefit partners" *7 points* -"Building public support, spread cost" *6 points* -"Better access/availability to information and services" *3 points* Others felt that it would be an advantage to spread the cost of the network between public and private enterprises, and to give business faster connections to serve their customers and clients. Disadvantages: When it came to disadvantages, the functions and use of a joint network, such as security of documents and information management were mentioned: -"Coordination, prioritization' DEN-REE PRODUCTIONS 4/1 B/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page '18 points* -"Mandated security requirements, quality of service, reliability, limited area and scope (court documents, law & justice, financial, individual)" '17 points* -"The functions could be limited by the needs of the city *vs.* the needs of the partner (availability)" *8 points* -"How to service those outside city limits" *3 points* -" Billing/ownership" *1 point* Others saw issues with the related costs, meeting the demands for service, and a feeling that the general population would not appreciate the cost of the service to business. Question #5 5. Is 'open access" and competition important for the advancement of broadband telecommunications services? This was a more general question, with the simple answer of "yes" being the top response. -"Yes" *23 points* -"Yes, competition and alternatives are important" *10 points* -"Yes! Should be available to all or most, Competitive prices down" *5 points* -"Competition will always promote better function at a lower cost" *5 points* -"Yes, levels playing field" *1 point* Others said that the competition stemming from "open access" could help to keep costs down, giving everyone access to the service. Only one respondent answered this question in the negative, saying service providers "will probably need some assurance of cost recovery". Question #6 6. What criteria should the City use to evaluate proposals to develop a broadband telecommunications infrastructure? These responses touched on a variety of suggestions, most related to quality and cost of service: -"QOS & ROI" '13 points* -"Cost, Access to many or all, Quality" '13 points* -"Look at existing resources and their integration" *8 points* -"Level of function serving the greatest # of citizens" *8 points* DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 62 -"Cost, Quality of service" *1 point* -"Needs of the community" *9 points* One panelist wondered how long it would take for the network project to "break even". Question #7 7. W~aat needs do public, educational and governmental organizations have that may go un-served if a broadband infrastructure is not developed? With this question, workshop participants were encouraged to look into the future and visualize what needs might be unserved if the network is not developed. The morning group clearly showed a determination that the network should be constxucted, again with the cost of development a theme in their responses: -"None - Cost is the issue (Available faciUties vs. cost - problem now!)" *23 points* -"They will remain at the current technology for sometime" *8 points* -"Economic development absolutely requires broadband access as a minimum requirement" *8 points* -"Inability to have top-notch communications (local)" *1 point* Question #8 8. What obstacles would need to be overcome with "last mile" infrastructure? In this question, participants were allowed to freely touch on a variety of challenges that must be bridged with the "last mile" deployment of a community network. The cost of that development was the primary concern: -"Cost & how to allocate cost over business or residential users" '16 points* -"Cost & Time" '14 points* -"Cost, Administration, Remote locations?, Whole county" *11 points* -"Cost, How to implement will little to no disruption to community" *10 points* -"ESA/Permits cost, room on ROW" *5 points* Another panelist expressed concern about the cost of equipment (cable plant) and service for servicing the "last mile" Question ~9 9. What types of business~mdustry could we attract to PA if broadband services were available? The panel was asked to group their responses under two headings for this question ("business" and "industxy'), although participants placed all their responses under the "business" heading. DEN-RE£ PRODUCnONS 4118/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 63 Business: These responses touched on a variety of business sectors that need broadband in order to compete in today's markets: -"Call Centers, All Internet dependent bus., Engineering/Architectural, Government" '15 points* -"High tech research and development, Software development" '13 points* -"Information services, Aerospace, Server farms" *10 points* -"Small e-businesses software etc. We already have off Pen. Broadband, Again $$$, *6 points* Industry: The morning group had no specific responses under the "industry" heading. Question #10 10. Should the City be involved in providing telecommunications ~ervices, or only be the service provider of last resort? This question generated a number of responses, as well as verbal discussion as the cards were collected. The group was asked to separate their answers into subheadings of "advantages" and "disadvantages" of the City of Port Angeles actually providing the telecommunications service. Generally, most saw the disadvantages of this scenario. Advantages: When considering possible advantages, most of the panelists felt the city should only provide specific telecommunications services if it were a "last resort" situation, although some felt the city could help facilitate the implementation of service, or use of existing infrastructure. -"Last resort~' *10 points* -"Only if service were lower cost'' *5 points* -"No, possibly in over it's head, May not be cost effective, Control and administration requirements, We would like dark fiber, Not involved (but should facilitate)" *3 points* Other responses that were included but didn't receive any votes, and actually followed more of the "disadvantage" theme: -"Ability to provide service which may not be totally financially feasible" -"May drive costs down and/or increase availability of services" -"No, shouldn't step in (shouldn't be last resort)" -"Partner for competition - best, Last resort - No" Disadvantages: DEN-REE PRODUCTIONS 4/1812001 Appendix 17: Telecommunications Needs and Solutions Workshop page 64 With this subheading, the participants were actually challenged to look at the same question from a different angle. Although the second response was more truly a "disadvantage" consideration, the top choice once more sent a clear message of concern about having the city be that "provider of last resort": -"Government should not be competing with private enterprise" *25 points* -"Telco may not be as responsive in bringing new or better services if revenue is lost" '15 points* PM Workshop The afternoon group (see list in section 1) represented a somewhat different panel although it was not specifically organized that way. Because of the participant's individual schedules, it developed that the afternoon workshop had a higher proportion of those representing business than the morning group (which had a few more representing local government). The scheduling factor also resulted in a scenario where there was more of a demographic "mix" in the afternoon group, with the participation of several women (whereas there had been no women on the morning panel). These differences contributed to not only different viewpoints, but also more spirited verbal discussion as the questions were reviewed. Question #1 1). What telecommunications services needs does your organization have in PA today? Are there any un-served broadband needs? Are your needs changing? If so, how? As with the morning session, the group was asked to break this question down into key subheadings. Unserved: Whereas the morning panel had touched on larger, overall network concerns, the small business participants in the afternoon group hit on more specific problems, especially as it related to POTS (plain old telephone service) and existing voice networks, be they wired or wireless. But like their colleagues in the morning, the afternoon group listed affordable telecom, and especially broadband service as a top priority: -"Broadband options, low cost broadband" *28 points* -"Adequate phone lines (# of lines)" *25 points -"Business focus ISP (no email blocking)" '14 points* -"More options for phone services" *11 points* -"Internet businesses, Home user & home business, faster connectivity" *3 points* -"Reliability of DCS & phones and cell, Cost is high" *5 points* DEN-REE PRODUCTIONS 4118/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 65 One other participant said they would like to be able to watch their local news, and other streaming video over better Internet connections. NeedsToday: As with the morning group, the afternoon participants made it clear that "more bandwidth at lower cost" is their highest priority. (It should be noted here that the point totals for these and some of the following questions might be somewhat higher than the maxbnum number of potential points expected for each question. This may have stemmed from some confusion on the part of the participants, as they were "voting", or their enthusiasm for some of the response cards. In any event, since the process was only interested in finding the "top" responses to each question, the slight variances in point totals do not affect the overall findings and conclusions). -"More bandwidth, Low cost broadband" *47 points* -"Last mile broadband" '13 points* -"Video conferencing & streaming video" *10 points* -"Telephone overseas" *6 points* -"Affordable DSL or cable modems" *5 points* -"Broadband Internet access" *5 points* -"Visibility, expanded, markets, cost effectiveness" *4 points* -"Cell phone reception" *4 points* -"Voice data video" *4 points* -"More broadband; >T-I, better connectivity between disparate systems" *3 points* -"DSL better rates" *3 points* -"To establish a web page, Internet & economical access" *3 points* -"ISDN POP (in PA)' *1 point* Others said "unserved needs" today included: -"Clean, clear pots for data lines (low speed band)" -"Fast, reliable, economical voice- data" -"Interactive communications between citizens and county" Change: The afternoon group's focus on business was reflected in their responses under the third heading for Question #1, i.e. how their telecommunications needs are changing, with the growing demand presented by the Internet and the ability to deliver new services at the forefront. Others DEN-~EE PROOUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 66 (representing the college and the public pointed to the need for on-line education and access to services: -"Increased Internet competilion (more competition to local business)" '19 ~oints* -"Deliver more services via Internet (Banking)" '18 ~oin~* -"Video conferencing w/the home user- cheap" '14 ~oints* -"Internet via TV" *6 :~oints* -"To utilize Internet retail sales more effectively" *6 Joints* -"Affordable teleconferencing" *5 ~oints* -"More sites (Internet) require video download" *4 points* -"Customers accessing data remotely, Video conferencing, Video training/Education, telecommute' *4 points* -"More online instruction" *3 points* -"Access to gov't, info & services, more efficiently" *2 points* Other responses mentioned the need to have more broadband to handle more complex streams information, such as data and pictures, interactive training and conferencing from a central location, sharing of network resources between education and government and private, as we as public video conferencing. Question #2 2. How would your or~anizatlon use a broadband wide area network if it was available and affordable? Like their counterparts in the morning, the participants in the afternoon work session saw a need to extend services between remote locations and their people they serve: -"Video conferencing remote training" *34 points* -"]~ring education to homes or businesses (requires Bandwidth) expand to remote areas or for people that cannot spend time to attend school away" *20 points* -"Expectations of 24/7/365 (reliability)" '13 points* -"Market to companies outside area as a benefit" *11 points* -"Extended OMC's connectivity to Docs & other healthcare providers" *8 points* -"We already use DSL- Homes For Sale, Display our product, Relay MIS info, Training" *5 points* Other comments: DEN-REE PRODUCTIONS 4118/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 67 -"Move our product form client/server onsite to ASP (Intemet-use firms update once)" -"Video-training/education, Video-Corderence, Remote access-data, contractors, employers" Question #3 3. Is development of a broadband network throughout PA important? Should investment be limited to those areas that make economic sense or should the City pursue ~itywlde development? How could an investment in a cli3n~rlde project be justified? The afternoon group was also asked to break their responses to Question #3 into three different subheadings. Limited Investment: In this area, the participants had more suggestions than the morning group, touching on the concept of using a limited network deployment, with partnerships to help with expansion of the backbone: -"Limited at first, then partner for expansion" *28 points* -"Economic sense (otherwise we'll never get anything) -Important to get something for EDC' *26 points* -"Start with limited for economic development" '14 points* Citywide: At the same time, the participants felt a large deployment was necessary Lf the network were going to have the greatest benefit, in the shortest period of time. In fact, they saw those partnerships as key to overcoming service limits: -"Yes, it is important, the largest area of development should be pursued. When you limit the area, it increases the digital divide to those outside the area. Citywide at a minimum." '25 points* -"Should quickly develop those services that make economic sense. The rate of change is too great for this to be a five year project. Similar to how roads are developed." '19 points* -"If there are no partnerships for investment, there will be limits of service" '15 points* -"Yes, More than citywide, W/o some idea of the cost - can justify" *5 points* Justified: The afternoon group clearly felt that economic development was a primary means of justifying the investment in a community network. Unlike the morning workshop, no one mentioned the idea of put~dng the question to a vote: -"Attract business who need this service level" *27 points* -"To attract firms to locate (in the served area) & increase jobs & sales of products for health & stability of our area" '15 points* DEN-REE PRODUCTIONS 411812001 Appendix 17: Telecommunications Needs and Solutions Workshop page 68 -"Economic development attract hi tech co. better gov't serv. opportunities for sm. Business for outreach" '10 points* -"Equal ground with metropolitan area" *9 points* -"Economic dev attract high tech companies" *5 points* -"Increased competition (i.e. lower cost) of services provided over wire. More providers (TV, phone, Internet)" *5 points* -"Improve health of "individuals" by giving HC providers better information- faster" *4 points* -"Delivery of social services to outlying populations" *3 points* -"Better services attract seniors for retirement" *3 points* Other responses included: -"Provide better services (by our gov't)' -"Provide better services to PA citizens at lower costs" -"Attracts new business - high tech -multinational" -"Provide oppor, for network sharing: schools, healthcare, gov't" -"Number of business and individuals that are connected is increasing" Question #4 4. What are the advantages/disadvantages of a C. Jty partnership in a broadband telecommunications backbone to enable broadband services for business? Advamtages: The afternoon group saw specific advantages to such a partnership, not the least of which was the speed of broadband deployment, and the use of existing technology: -"Would make services available now!" *32 points* -"Can use their technology - save cost, Do not reinvent wheel" *22 points* -"More advantages than disadvantages, provided gov't doesn't slow down development~' '13 points* -"Shared costs" *7 points* -"Faster completion of the project" *5 points* -"Lower maintenance costs - Telecom provides" *4 points* Other comments included having a "method for Internet access", "non-stagnation" and pushing the "development to meet local business needs rather than a private ISP needs." Disadvantages: D£N-REE PRODUCTIONS 4118/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 69 Concerns centered over the potential problems in trying to work out the details of such a partnership: -"Another entity to negotiate with" *30 points* -"Changing leadership (either side of partnership)" '15 points* -"Par~erships require lawyers which can slow down process" *10 points* -"Excludes other competition?" *6 points* -"Company could default, go under, etc." *1 point* One of the more colorful response cards in the entire workshop process came to this question: -"Getting in bed with devil? Could be" Question #5 5. Is 'open access" and competition important for the advancement of broadband telecommunications services? This group showed support for the concept of "open access", especially for consumer benefit, but with conditions that take into account the private sector: -"Yes - But: Business & gov't using pipe should divide cost of maintenance" *20 points* -"The consumer benefits ultimately w/more options, better service, lower prices" '16 points* -"Open access encourages "buy in" to the project" '15 points* -"Competition promotes growth & reduced cost. Open access provides the greatest opportunity for new services" *10 points* -"Increased choices "Freedom"" *7 points* -"Yes, lower prices, Less restrictions for private" *6 points* -"No-we need limited access to qualified provider - but enough of them to compete" *5 points* -"Lower costs?" *4 points* The group also said that open access is "good, provided, each user pays for their share", that it "should lower the cost for everybody" by promoting "competition which drives the price down for users". Questions #6 6. ~V~ai criteria should the City use to evaluate proposals to develop a broadband teleconununications infrastructure? ~)EN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 70 The afternoon workshop generated a wide range of responses, but the primary points hke reliability and experience (of the partner) received the highest marks. -"Reliability, Technology, Experience" *32 points* -"Cost- how much- Who's paying use of existing facilities? & infrastructure" '13 points* -"Consider what infrastructure already exists & how to access" *11 points* -"Whatever's best for the area. To promote growth & development -- Quality of life!! for all residents" *6 points* -"Cost effective, cost of user fees' *6 points* -"% of cost paid by partner" *5 points* -"The problem will be to trade off, good vs. cheap vs. fast, You will only get to pick 2" *5 points* -"Potential for expansion" *4 points* -"Technical ability - prior projects" *3 points* -"Partners willing to advance open to listen to smaller groups as well as large entities" *2 points* -"Cost timeline reputation" *1 point* Others suggested the costs to the consumer, as well as the amount of control, technology and infrastructure. Question #7 7. What needs do public, educational and governmental organizations have that may go un-served if a broadband infrasb'ucture is not developed? Most of the concern here centered over the so-called "digital divide", or access issue, as well as impacts on impact growth and seeing the area slip behind in business competition: -"Slow economic growth" *27 points* -"Digital divide- those without will be farther divided from those who have access" *25 points* -"Our community & area become non-competitive vs. other communities" *11 points* -"Slow development of duplicate services. Harder to attract new businesses. Existing businesses less competitive" *5 points* -"Lost in the "50's" *4 points* -"Addresses business? We'll lose our kids, business to metro area" *3 points* -"Continued development of duplicate services & facilities" *1 point* DEN-REE PRODUCTIONS 4/18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 71 -"Businesses could loose opportunities on internet" *1 point* Question #8 8. What obstacles would need to be overcome with ~last mile' infrastructure? As with the morning group, "cost" was the primary concern with the responses to this question: -"Cost - convincing people of importance" '21 points* -"Consumer desire" '13 points* -"Justification of costs" *11 points* -"Partnerships that can feasibly complete this. Limited options. Cost" *9 points* -"Who is doing it? Squabbling" *9 points* -"Force USWest to reduce installation cost of ISDN (excellent last mile solution), Add ISDN POP" *6 points* -"Another wire to your house? Another ditch through your yard? OR can we use what's there?" *5 points* One participant suggested that the cost question might be best addressed by developing the "last mile" infrastructure through partnering. Queslion #9 9. What types of buslness~lndustr~ could we attract to PA if broadband services were available? Perhaps because of their business outlook, the afternoon group had a much broader ranger of suggestions for both subheadings to this question. Business: -"Businesses that use "Internet" distributed & developed products & services" *26 points* -"Any business who brings employees who have high expectations in the area of high speed connection & services" '13 points* -"Large business, Call centers, Remote Transcriptions, ASP, Application service providers" '6 points* -"Consulting services, Engineering services, Programmers" '3 points* Other ideas included software developers, media/technology firms, advertising and graphic arts. Industry: Unlike the morning group, the afternoon panel had a number of suggestions on industries that might be athtacted to relocate to Port Angeles if broadband were available: DEN-EEl[ PRODUCTIONS 4/'18/2001 Appendix 17: Telecommunications Needs and Solutions Workshop page 72 -"Research & development teams, Software developers, Technical manufacturers" '19 points* -"Any knowledge transfer industry" '12 points* -"You will not likely attract "heavy" industry due to our infrastructuring. (No railroad, poor I-twy ~0~)" *11 points* -"Extreme sport manufacturing design, customer support centers" *3 points* Question #10 10. Should the Cit~j be involved in providing telecommunications services, or only be the service prov/der of last resort? This panel provided a sharp look at both the "advantages" and "disadYa~tages" of the city being a service provider, saying the city could/should actually take steps to insure the availability of service if necessary: Adva~ntages: -"Guarantee the service would be available" '41 points* -"Better to use the expertise of providers" *30 points* -"Yes resources, yes aval., yes technology aval. This is the reason why we have a "city" *23 points* -"Any/all of the above (in the question) as needed to fulfill the need" '14 points* Other Ideas: Disadvantages: -"Unknown territory" '16 points* -"Stifles competition, probably more expensive (few businesses are like the gov't)' '13 points* -"Interfere with private & smaller services" *11 points* -"Taxpayer's end vs. subsiding private businesses" *4 points* Some expressed concerns about the existence of another "government regulated entity", and whether the city would be capable of providing technical support. PRODUCTIONS 4/1 812001